e424b3
Filed
Pursuant to Rule 424(b)(3)
Registration No. 333-133652
HEALTHCARE
TRUST OF AMERICA, INC.
SUPPLEMENT
NO. 3 DATED FEBRUARY 1, 2010
TO
THE PROSPECTUS DATED OCTOBER 23, 2009
This document supplements, and should be read in conjunction
with, our prospectus dated October 23, 2009, relating to
our offering of 221,052,632 shares of common stock, and our
Supplement No. 1 dated October 23, 2009 and Supplement
No. 2 dated November 25, 2009. The purpose of this
Supplement No. 3 is to:
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disclose the status of our initial public offering;
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include a description of our current portfolio;
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disclose our recent acquisitions;
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disclose selected financial data;
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disclose our performance funds from operations and
modified funds from operations;
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disclose information regarding our distributions;
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disclose our property performance net operating
income;
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disclose the termination of our services agreement with American
Realty Capital II, LLC;
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update disclosure related to our personnel;
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disclose compensation paid to our former advisor; and
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include Greenville Hospital Systems financial data and our
unaudited pro forma financial statements.
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Status of
our Initial Public Offering
As of January 25, 2010, we had received and accepted
subscriptions in our offering for 139,176,720 shares of our
common stock, or approximately $1,390,255,137, excluding shares
issued under our distribution reinvestment plan. As of
January 25, 2010, approximately 60,823,000 shares
remained available for sale to the public under our initial
public offering, excluding shares available under our
distribution reinvestment plan. This offering has been extended
pursuant to SEC Rule 415 under the Securities Act of 1933,
as amended, and will expire no later than the earlier of
March 19, 2010 or the date on which the maximum offering
has been sold.
Our
Current Portfolio
We provide stockholders the potential for income and growth
through investment in a diversified portfolio of real estate
properties, focusing primarily on medical office buildings and
healthcare-related facilities. As of January 25, 2010, we
owned 53 portfolios that include 179 buildings with an aggregate
gross leasable area, or GLA, of 7.4 million square feet and
two real estate related assets, and the aggregate purchase price
of our total portfolio was approximately $1.46 billion.
Each of our properties is 100% owned by our operating
partnership except one, which is 80.0% owned by our operating
partnership through a joint venture.
The tables below provide summary information regarding our
portfolios as of January 25, 2010:
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Properties Owned
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as a Percentage of
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State
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Number(1)
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Aggregate Purchase Price
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Arizona
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5
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12.6
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%
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California
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3
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3.5
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Colorado
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2
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2.4
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Florida
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4
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6.7
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Georgia
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6
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6.5
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Indiana
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5
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9.8
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Kansas
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1
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1.0
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Maryland
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1
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0.8
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Minnesota
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2
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1.2
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Missouri
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2
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4.9
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New Hampshire
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1
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1.0
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Ohio
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5
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5.5
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Oklahoma
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1
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2.1
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Pennsylvania
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1
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1.9
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South Carolina
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2
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12.7
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Tennessee
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2
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2.9
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Texas
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10
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16.7
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Utah
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1
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2.1
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Virginia
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1
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0.4
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Wisconsin
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2
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5.3
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Total
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57
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100.0
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%
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(1) |
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In certain cases we have acquired portfolios that include
properties in multiple states. |
The table below describes the type of real estate properties and
other real estate related assets we owned as of January 25,
2010:
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Number
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Gross
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of
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Leasable
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Type of Investment
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Investments
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Area
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Medical Office
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41
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6,092,000
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Healthcare-Related Facility
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7
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1,004,000
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Office
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3
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312,000
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Other Real Estate Related Assets
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2
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N/A
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Total
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53
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7,408,000
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The table below describes the average effective annual rent per
square foot and the occupancy rate for each of the last five
years ended December 31, 2009, for which we owned
properties:
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2005(1)
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2006(1)
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2007(1)
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2008(2)
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2009(2)
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Average Effective Annual Rent per Square Foot
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N/A
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N/A
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$
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18.41
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$
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16.87
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$
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17.92
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Occupancy Rate
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N/A
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N/A
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88.6
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%
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91.3
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%
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90.4
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%
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(1) |
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We were initially capitalized on April 28, 2006 and
therefore we consider that our date of inception. We purchased
our first property on January 22, 2007. |
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Based on leases in effect as of December 31, 2008 and
December 31, 2009. |
2
The following table presents the sensitivity of our annual base
rent due to lease expirations for the next ten years at our
properties, by number, square feet, percentage of leased area,
annual base rent and percentage of annual rent as of
September 30, 2009:
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% of Leased
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% of Total
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Area
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Annual Rent
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Number
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Total Sq. Ft.
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Represented
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Annual Rent
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Represented
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of Leases
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of Expiring
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by Expiring
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Under Expiring
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by Expiring
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Expiring
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Leases
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Leases
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Leases
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Leases(1)
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2010
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122
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348,000
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6.2
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%
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$
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6,821,000
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6.5
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%
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2011
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107
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464,000
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8.2
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%
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$
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9,291,000
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8.9
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%
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2012
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142
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509,000
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9.0
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%
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$
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9,384,000
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9.0
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%
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2013
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113
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682,000
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12.1
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%
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$
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12,926,000
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12.4
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%
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2014
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83
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630,000
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11.2
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%
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$
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9,217,000
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8.8
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%
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2015
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35
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296,000
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5.3
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%
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$
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6,671,000
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6.4
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%
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2016
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47
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369,000
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6.5
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%
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$
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6,812,000
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6.5
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%
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2017
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43
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332,000
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5.9
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%
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$
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6,103,000
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5.8
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%
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2018
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46
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364,000
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6.5
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%
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$
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6,532,000
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6.2
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%
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2019
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31
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177,000
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3.1
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%
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$
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3,546,000
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3.4
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%
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Thereafter
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85
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1,463,000
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26.0
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%
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$
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27,221,000
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26.0
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%
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Total
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854
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5,634,000
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100
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%
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$
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104,524,000
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100
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%
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(1) |
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The annual rent percentage is based on the total annual
contractual base rent as of September 30, 2009. |
As of September 30, 2009, no single tenant accounted for
10.0% or more of the GLA of our real estate properties.
Recent
Acquisitions
The table below summarizes the acquisitions we have completed
since October 23, 2009. Tenant financial data and pro forma
information has not been included in this supplement as the
properties described are not considered significant property
acquisitions pursuant to Securities and Exchange Commission
Rule 3-14
of
Regulation S-X.
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Average
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Annual
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Date
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GLA
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Purchase
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Mortgage
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Physical
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Rent per
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Property
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Location
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Acquired
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(Sq. Ft.)
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Price(1)
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Debt
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Occupancy
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Sq. Ft.
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Rush Medical Office Building Transaction(2)
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Oak Brook, IL
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12/1/2009
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N/A
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$
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37,135,000
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N/A
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N/A
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N/A
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Mary Black Medical Office Building
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Spartanburg, SC
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12/11/2009
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108,500
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$
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16,250,000
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N/A
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72.73
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%
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$
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12.54
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Hampden Place Medical Center
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Englewood, CO
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12/21/2009
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66,339
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$
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18,600,000
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$
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8,785,000
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100
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%
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$
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23.53
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Dallas LTAC Hospital
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Dallas, TX
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12/23/2009
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52,357
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$
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27,350,000
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N/A
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100
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%
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$
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50.14
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Smyth Professional Building
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Baltimore, MD
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12/30/2009
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62,092
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11,250,000
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N/A
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98.95
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%
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$
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16.70
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Denton Medical Rehabilitation Hospital
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Denton, TX
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12/30/2009
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43,632
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$
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15,485,000
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N/A
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100
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%
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$
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31.26
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Atlee Medical Portfolio(3)
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San Angelo, TX,
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12/30/2009
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92,503
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$
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20,501,000
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N/A
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100
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%
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$
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18.69
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Coriscana, TX and
Fort Wayne, IN
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Banner Sun City Medical
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Portfolio(4)
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Sun City and
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12/31/2009
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641,511
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$
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107,000,000
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$
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45,109,000
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91.06
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%
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$
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15.91
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Sun City West, AZ
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3
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(1) |
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The purchase price does not include transaction costs. |
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(2) |
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This is a first mortgage financing transaction collateralized by
the Rush Medical Office Building located on the campus of Rush
Oak Park Hospital. The loan term runs for up to five
(5) years. We and the owner of the Rush Medical Office
Building also signed an agreement which provides for the
possible future acquisition of the building (including the land)
by us, and provide us an ongoing right of first refusal and
various other opportunities. The Rush Medical Office Building is
currently master leased by Rush University Medical Center. The
term of the master lease runs through 2019, subject to extension
rights of the lessee. |
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(3) |
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This is a three building medical office portfolio located in
San Angelo and Corsicana, Texas and Fort Wayne,
Indiana. |
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(4) |
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This is a 17 property medical office portfolio. The portfolio is
91% leased and is located in the retirement communities of Sun
City and Sun City West in the northwest Phoenix metropolitan
area. These properties were developed in connection with the
Banner Boswell and Banner Del E. Webb hospitals. Approximately
95% of the portfolio is located on the hospital campuses and
approximately 28% of the portfolio is leased by Banner Health
and its affiliates. |
The weighted average capitalization rate for the above
properties is 8.6%. The capitalization rate for each property is
based on first year pro forma information and does not reflect
reserves for replacements.
4
Selected
Financial Data
The following selected financial data should be read with
Managements Discussion and Analysis of Financial Condition
and Results of Operations and our consolidated financial
statements and the notes thereto incorporated by reference into
the prospectus. Our historical results are not necessarily
indicative of results for any future period.
The following tables present summarized consolidated financial
information including balance sheet data, statement of
operations data, and statement of cash flows data in a format
consistent with our consolidated financial statements.
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September 30,
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December 31,
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April 28, 2006
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2009
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2008
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2007
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(Date of Inception)
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BALANCE SHEET DATA
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Total assets
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$
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1,528,415,000
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|
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$
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1,113,923,000
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$
|
431,612,000
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|
|
$
|
202,000
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Mortgage loan payables net
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|
|
452,041,000
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|
|
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460,762,000
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|
|
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185,801,000
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Total stockholders equity
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1,016,896,000
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|
599,320,000
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|
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175,590,000
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|
|
2,000
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2006 (Date of
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|
|
|
|
|
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Nine Months Ended
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Nine Months Ended
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Year Ended
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Year Ended
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Inception) through
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September 30,
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September 30,
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December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
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|
|
2009
|
|
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2008
|
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2008
|
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2007
|
|
|
2006
|
|
|
|
|
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INCOME STATEMENT DATA
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Total revenues
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92,042,000
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|
|
|
53,310,000
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|
|
|
80,418,000
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|
|
|
17,626,000
|
|
|
|
|
|
|
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|
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Net loss
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(20,409,000
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)
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|
|
(11,813,000
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)
|
|
|
(28,409,000
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)
|
|
|
(7,674,000
|
)
|
|
|
(242,000
|
)
|
|
|
|
|
Net loss attributable to controlling interest
|
|
|
(20,650,000
|
)
|
|
|
(11,969,000
|
)
|
|
|
(28,448,000
|
)
|
|
|
(7,666,000
|
)
|
|
|
(242,000
|
)
|
|
|
|
|
Net loss per share attributable to controlling
interest basic and diluted(1)
|
|
|
(0.20
|
)
|
|
|
(0.34
|
)
|
|
|
(0.66
|
)
|
|
|
(0.77
|
)
|
|
|
(149.20
|
)
|
|
|
|
|
STATEMENT OF CASH FLOWS DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
15,968,000
|
|
|
|
15,633,000
|
|
|
|
20,677,000
|
|
|
|
7,005,000
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(255,256,000
|
)
|
|
|
(455,571,000
|
)
|
|
|
(526,475,000
|
)
|
|
|
(385,440,000
|
)
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
432,748,000
|
|
|
|
468,759,000
|
|
|
|
628,662,000
|
|
|
|
383,700,000
|
|
|
|
202,000
|
|
|
|
|
|
OTHER DATA:
|
|
|
57,491,000
|
|
|
|
19,175,000
|
|
|
|
31,180,000
|
|
|
|
7,250,000
|
|
|
|
|
|
|
|
|
|
Distributions declared per share
|
|
|
0.55
|
|
|
|
0. 55
|
|
|
|
0.73
|
|
|
|
0.70
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Net loss per share is based upon the weighted average number of
shares of our common stock outstanding. Distributions by us of
our current and accumulated earnings and profits for federal
income tax purposes are taxable to stockholders as ordinary
income. Distributions in excess of these earnings and profits
generally are treated as a non-taxable reduction of the
stockholders basis in the shares to the extent thereof (a
return of capital for tax purposes) and, thereafter, as taxable
gain. These distributions in excess of earnings and profits will
have the effect of deferring taxation of the distributions until
the sale of the stockholders common stock. |
Our
Performance Funds From Operations and Modified Funds
from Operations
Due to certain unique operating characteristics of real estate
companies, the National Association of Real Estate Investment
Trusts, or NAREIT, an industry trade group, has promulgated a
measure known as Funds from Operations, or FFO, which it
believes more accurately reflects the operating performance of a
REIT. FFO is not equivalent to our net income or loss as
determined under generally accepted accounting principles in the
United States, or GAAP.
5
We define FFO, a non-GAAP measure, consistent with the standards
established by the White Paper on FFO approved by the Board of
Governors of NAREIT, as revised in February 2004, or the White
Paper. The White Paper defines FFO as net income or loss
computed in accordance with GAAP, excluding gains or losses from
sales of property but including asset impairment write downs,
plus depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for
unconsolidated partnerships and joint ventures are calculated to
reflect FFO.
The historical accounting convention used for real estate assets
requires straight-line depreciation of buildings and
improvements, which implies that the value of real estate assets
diminishes predictably over time. Since real estate values
historically rise and fall with market conditions, presentations
of operating results for a REIT, using historical accounting for
depreciation, could be less informative. The use of FFO is
recommended by the REIT industry as a supplemental performance
measure.
Presentation of this information is intended to assist the
reader in comparing the operating performance of different
REITs, although it should be noted that not all REITs calculate
FFO the same way, so comparisons with other REITs may not be
meaningful. Factors that impact FFO include non cash GAAP income
and expenses, one-time non recurring costs, timing of
acquisitions, yields on cash held in accounts, income from
portfolio properties and other portfolio assets, interest rates
on acquisition financing and operating expenses. Furthermore,
FFO is not necessarily indicative of cash flow available to fund
cash needs and should not be considered as an alternative to net
income, as an indication of our liquidity, nor is it indicative
of funds available to fund our cash needs, including our ability
to make distributions and should be reviewed in connection with
other measurements as an indication of our performance. Our FFO
reporting complies with NAREITs policy described above.
Changes in the accounting and reporting rules under GAAP have
prompted a significant increase in the amount of non-cash and
non-operating items included in FFO, as defined. Therefore, we
use modified funds from operations, or MFFO, which excludes from
FFO one-time, non recurring charges, acquisition expenses, and
adjustments to fair value for derivatives, to further evaluate
our operating performance. We believe that MFFO with these
adjustments, like those already included in FFO, are helpful as
a measure of operating performance because it excludes costs
that management considers more reflective of investing
activities or non-operating changes. We believe that MFFO
reflects the overall operating performance of our real estate
portfolio, which is not immediately apparent from reported net
loss. As such, we believe MFFO, in addition to net loss and cash
flows from operating activities, each as defined by GAAP, is a
meaningful supplemental performance measure and is useful in
understanding how our management evaluates our ongoing operating
performance. Management considers the following items in the
calculation of MFFO:
Acquisition costs: Prior to 2009, acquisition
costs were capitalized and have historically been added back to
FFO over time through depreciation; however, beginning in 2009,
acquisition costs related to business combinations are expensed.
These acquisition costs have been and will continue to be funded
from the proceeds of our offering and not from operations. We
believe by excluding expensed acquisition costs, MFFO provides
useful supplemental information that is comparable for our real
estate investments.
One-time, non recurring charges: FFO includes
one-time charges related to the cost of our transition to
self-management. These items include, but are not limited to,
additional legal expenses, system conversion costs,
non-recurring employment costs, and transitional property
management costs. Because MFFO excludes one-time costs,
management believes MFFO provides useful supplemental
information by focusing on the changes in our fundamental
operations that will be comparable rather than on one-time,
non-recurring costs.
Former Advisor Fees: FFO includes fees paid to
our former advisor for asset management fees and above market
property management fees. These costs are duplicative to the
costs of self management. Due to our transition to self
management, these costs will not be incurred after
September 20, 2009. Accordingly, management believes that
MFFO should exclude such costs in order to provide useful
supplemental information to compare our fundamental operations
to previous periods as well as all future periods.
Adjustments to fair value for derivatives: In
order to manage interest rate risk, we enter into interest rate
swaps to fix interest rates, which are derivative financial
instruments. These interest rate swaps are required to
6
be recorded at fair market value, even if we have no intention
of terminating these instruments prior to their respective
maturity dates. All interest rate swaps are marked-to-market
with changes in value included in net income (loss) each period
until the instrument matures. We have no intentions of
terminating these instruments prior to their respective maturity
dates. The value of our interest rate swaps will fluctuate until
the instrument matures and will be zero upon maturity of the
instruments. Therefore, any gains or losses on derivative
financial instruments will ultimately be reversed. Management
believes that MFFO provides information on the realized costs of
financing our assets independent of short-term interest rate
fluctuations.
The following is the calculation of FFO and MFFO for each of the
last four quarters ended September 30, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
|
June 30,
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
Net loss
|
|
$
|
(10,074,000
|
)
|
|
$
|
(3,535,000
|
)
|
|
$
|
(6,800,000
|
)
|
|
$
|
(16,596,000
|
)
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization consolidated properties
|
|
|
13,287,000
|
|
|
|
12,645,000
|
|
|
|
13,299,000
|
|
|
|
12,493,000
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (income) loss attributable to noncontrolling interest of
limited partners
|
|
|
(70,000
|
)
|
|
|
(102,000
|
)
|
|
|
(70,000
|
)
|
|
|
117,000
|
|
Depreciation and amortization related to noncontrolling interests
|
|
|
(51,000
|
)
|
|
|
(51,000
|
)
|
|
|
(51,000
|
)
|
|
|
(51,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO
|
|
$
|
3,092,000
|
|
|
$
|
8,957,000
|
|
|
$
|
6,378,000
|
|
|
$
|
(4,037,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition expenses
|
|
|
5,920,000
|
|
|
|
1,680,000
|
|
|
|
1,500,000
|
|
|
|
0
|
|
One time charges
|
|
|
1,112,000
|
|
|
|
286,000
|
|
|
|
575,000
|
|
|
|
280,000
|
|
Former advisor fees
|
|
|
1,765,000
|
|
|
|
1,999,000
|
|
|
|
1,913,000
|
|
|
|
2,038,000
|
|
(Gain) loss on interest rate swaps
|
|
|
(66,000
|
)
|
|
|
(2,361,000
|
)
|
|
|
(930,000
|
)
|
|
|
12,408,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MFFO
|
|
$
|
11,823,000
|
|
|
$
|
10,561,000
|
|
|
$
|
9,436,000
|
|
|
$
|
10,689,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MFFO per share diluted
|
|
$
|
0.10
|
|
|
$
|
0.10
|
|
|
$
|
0.11
|
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weight average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
124,336,078
|
|
|
|
106,265,880
|
|
|
|
84,672,174
|
|
|
|
65,904,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
124,336,078
|
|
|
|
106,265,880
|
|
|
|
84,672,174
|
|
|
|
65,904,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three and nine months ended September 30, 2009,
MFFO per share has been impacted by the increase in net proceeds
realized from our existing offering of shares. For the three
months ended September 30, 2009, we sold
13,282,000 shares of our common stock, increasing our
outstanding shares by 12%. For the nine months ended
September 30, 2009, we sold 53,276,000 shares of our
common stock, increasing our outstanding shares by 72%. The
proceeds from this issuance were temporarily invested in
short-term cash equivalents until they could be invested in
medical office buildings and other healthcare-related facilities
at favorable pricing. Due to lower interest rates on cash
equivalent investments, interest earnings were minimal. We
expect to invest these proceeds in higher-earning medical office
buildings or other healthcare related facility investments
consistent with our investment policy to identify high quality
investments. We believe this will add value to our stockholders
over our longer-term investment horizon, even if this results in
less current period earnings. We acquired the GHS portfolio on
September 18, 2009. If this acquisition had closed on
July 1, 2009, our MFFO would have been $14,373,000 and
$34,447,000 for the three and nine months ended
September 30, 2009. We acquired acquisitions totaling
$253,571,000 in the
7
fourth quarter of 2009. If those acquisitions had closed on
July 1, 2009, our MFFO would have been $18,993,000 and
$39,067,000 for the three and nine months ended
September 30, 2009.
Information
Regarding our Distributions
The amount of the distributions to our stockholders is
determined by our board of directors and is dependent on a
number of factors, including funds available for payment of
distributions, our financial condition, capital expenditure
requirements and annual distribution requirements needed to
maintain our status as a REIT under the Internal Revenue Code of
1986, as amended.
Our board of directors approved a 6.50% per annum, or $0.65 per
common share, distribution to be paid to our stockholders
beginning on January 8, 2007, the date we reached our
minimum offering of $2,000,000. The first distribution was paid
on February 15, 2007 for the period ended January 31,
2007. On February 14, 2007, our board of directors approved
a 7.25% per annum, or $0.725 per common share, distribution to
be paid to our stockholders beginning with our February
2007 monthly distribution, which was paid in March 2007.
Distributions are paid to our stockholders on a monthly basis.
If distributions are in excess of our taxable income, such
distributions will result in a return of capital to our
stockholders. Our distribution of amounts in excess of our
taxable income has resulted in a return of capital to our
stockholders.
For the nine months ended September 30, 2009, we paid
distributions of $54,159,000 ($27,493,000 in cash and
$26,666,000 in shares of our common stock pursuant to our
distribution reinvestment plan), compared to cash flow from
operations of $15,968,000. For the year ended December 31,
2008, we paid distributions of $28,042,000 ($14,943,000 in cash
and $13,099,000 in shares of our common stock pursuant to the
DRIP), compared to cash flows from operations of $20,677,000.
From inception through December 31, 2008, we paid
cumulative distributions of $34,038,000 ($18,266,000 in cash and
$15,772,000 in shares of our common stock pursuant to the DRIP),
compared to cumulative cash flows from operations of
$27,682,000. The distributions paid in excess of our cash flow
from operations were paid using proceeds from this offering.
The following presents the amount of our distributions and the
source of payment of such distributions for each of the last
four quarters ended September 30, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
|
June 30,
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
Distributions paid in cash
|
|
$
|
11,024,000
|
|
|
$
|
9,156,000
|
|
|
$
|
7,313,000
|
|
|
$
|
5,669,000
|
|
Distributions reinvested
|
|
|
10,884,000
|
|
|
|
8,848,000
|
|
|
|
6,934,000
|
|
|
|
5,192,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total distributions
|
|
$
|
21,908,000
|
|
|
$
|
18,004,000
|
|
|
$
|
14,247,000
|
|
|
$
|
10,861,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source of distributions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from operations
|
|
$
|
1,718,000
|
|
|
$
|
8,355,000
|
|
|
$
|
5,895,000
|
|
|
$
|
5,044,000
|
|
Offering proceeds
|
|
|
20,190,000
|
|
|
|
9,649,000
|
|
|
|
8,352,000
|
|
|
|
5,817,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total sources
|
|
$
|
21,908,000
|
|
|
$
|
18,004,000
|
|
|
$
|
14,247,000
|
|
|
$
|
10,861,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2009, we had an amount payable of
$1,421,000 to Grubb & Ellis Healthcare REIT Advisor,
LLC, or our former advisor, and its affiliates for operating
expenses,
on-site
personnel and engineering payroll, lease commissions and asset
and property management fees, which will be paid from cash flow
from operations in the future as they become due and payable by
us in the ordinary course of business consistent with our past
practice.
For the three months ended September 30, 2009, cash flows
from operations included $5,920,000 in acquisition-related costs
in connection with our completed acquisitions in the third
quarter, $1,196,000 in asset management fees to our former
advisor and its affiliates and additional one-time charges of
$1,112,000 related to the cost of our transition to
self-management.
8
Our former advisor or its affiliates have no obligations to
defer or forgive amounts due to them and, as of
September 30, 2009, no amounts due to our former advisor or
its affiliates have been deferred or forgiven. In the future, if
our former advisor or its affiliates do not defer or forgive
amounts due to them or if our operating expenses increase as a
result of our transition to self-management, this could
negatively affect our cash flow from operations, which could
result in us paying distributions, or a portion thereof, with
proceeds from this offering or borrowed funds. As a result, the
amount of proceeds available for investment and operations would
be reduced, or we may incur additional interest expense as a
result of borrowed funds.
For the nine months ended September 30, 2009 and 2008, our
funds from operations, or FFO, was $18,504,000 and $12,782,000,
respectively. As more fully described below, FFO was reduced by
$13,393,000 and $5,906,000 for the nine months ended
September 30, 2009 and 2008 for certain one-time,
non-recurring charges, former advisor fees, acquisition-related
expenses and adjustments to fair market value of interest rate
swaps. Acquisition costs were previously capitalized as part of
the purchase price allocations and have historically been added
back to FFO over time through depreciation. For the nine months
ended September 30, 2009 and 2008 we paid distributions of
$54,159,000 and $17,181,000 respectively. Such amounts were
covered by FFO of $18,504,000 and $12,782,000, respectively,
which is net of the one-time, non recurring charges, former
advisor fees, acquisition-related costs and adjustments to fair
market value of interest rate swaps. The distributions paid in
excess of our FFO were paid using proceeds from our initial
offering. Excluding such one-time charges, former advisor fees,
acquisition-related costs and adjustments to fair market value
of interest rate swaps, FFO would have been $31,897,000 and
$18,688,000, respectively. See our discussion of FFO below.
In order to manage interest rate risk, we enter into interest
rate swaps to fix interest rates, which are derivative financial
instruments. These interest rate swaps are required to be
recorded at fair market value, even if we have no intention of
terminating these instruments prior to their respective maturity
dates. All interest rate swaps are marked-to-market with changes
in value included in net income (loss) each period until the
instrument matures. We have no intentions of terminating these
instruments prior to their respective maturity dates. The value
of our interest rate swaps will fluctuate until the instrument
matures and will be zero upon maturity of the instruments.
Therefore, any gains or losses on derivative financial
instruments will ultimately be reversed. Management believes
that MFFO provides information on the realized costs of
financing our assets independent of short-term interest rate
fluctuations.
Our
Property Performance Net Operating Income
As of September 30, 2009, we owned 45 properties and one
real estate related asset compared to 41 properties as of
December 31, 2008. The aggregate occupancy for the
properties was approximately 90.4% as of September 30, 2009
versus approximately 91.3% as of December 31, 2008.
The aggregate net operating income for the properties for the
nine months ended September 30, 2009 was $59,188,000
compared to $52,244,000 for the year ended December 31,
2008.
Net operating income is a non-GAAP financial measure that is
defined as net income (loss), computed in accordance with GAAP,
generated from properties before interest expense, general and
administrative expenses, depreciation, amortization and interest
and dividend income. We believe that net operating income
provides an accurate measure of the operating performance of our
operating assets because net operating income excludes certain
items that are not associated with management of the properties.
Additionally, we believe that net operating income is a widely
accepted measure of comparative operating performance in the
real estate community. However, our use of the term net
operating income may not be comparable to that of other real
estate companies as they may have different methodologies for
computing this amount.
To facilitate understanding of this financial measure, a
reconciliation of net loss to net operating income has been
provided for the nine months ended September 30, 2009 and
for the year ended December 31, 2008.
9
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
Year Ended
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
Net loss
|
|
$
|
(20,409,000
|
)
|
|
$
|
(28,448,000
|
)
|
Add:
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
21,955,000
|
|
|
|
9,560,000
|
|
Depreciation and amortization
|
|
|
39,231,000
|
|
|
|
37,398,000
|
|
Interest expense
|
|
|
18,644,000
|
|
|
|
34,164,000
|
|
Less:
|
|
|
|
|
|
|
|
|
Interest and dividend income
|
|
|
(233,000
|
)
|
|
|
(430,000
|
)
|
|
|
|
|
|
|
|
|
|
Net operating income
|
|
$
|
59,188,000
|
|
|
$
|
52,244,000
|
|
|
|
|
|
|
|
|
|
|
Termination
of Services Agreement with ARC II
Effective January 15, 2010, our services agreement with
American Realty Capital II, LLC, or ARC II, was terminated.
Pursuant to this agreement, ARC II was to provide consulting
services to us in connection with our follow-on offering. As a
result of our successful transition to self-management, we are
no longer in need of these services. Because of the termination
of the agreement, ARC II is no longer entitled to the
1.5% subordinated incentive payment upon certain liquidity
events based on the value of the assets we acquire with the
proceeds of our follow-on offering.
Changes
in Personnel
Kelly Hogan, our former Controller and Assistant Secretary, left
our company on December 11, 2009. Katherine E. Black joined
our company on January 11, 2010 and serves as our
Controller. From May 2006 to January 2010, Ms. Black served
as the Director of Accounting for Seton Family of Hospitals in
Austin, Texas. Prior to joining Seton Family of Hospitals in
2006, Ms. Black served as a senior auditor at
Deloitte & Touche LLP, from 2003 to 2006, serving both
public and privately held companies. Ms. Black also worked
as an auditor at the Arizona Office of the Auditor General from
2001 to 2003. She graduated from Arizona State University with a
B.A. degree in Accounting and Religious Studies. She is a member
of the AICPA and the Arizona Society of CPAs. Ms. Black is
a Certified Public Accountant licensed in Arizona.
10
Compensation
Paid to our Former Advisor
|
|
|
|
|
|
|
Amounts Incurred
|
|
|
|
Inception to
|
|
|
|
September 30,
|
|
Type of Compensation
|
|
2009
|
|
|
Offering Stage:
|
|
|
|
|
Selling Commissions
|
|
$
|
113,212,000
|
|
Marketing Support Fee and Due Diligence Expense Reimbursement
|
|
$
|
31,377,000
|
|
Other Organizational and Offering Expenses
|
|
$
|
11,357,000
|
|
Acquisition and Development Stage:
|
|
|
|
|
Acquisition Fees
|
|
$
|
34,487,000
|
|
Reimbursement of Acquisition Expenses
|
|
$
|
36,000
|
|
Operational Stage:
|
|
|
|
|
Asset Management Fee
|
|
$
|
11,550,000
|
|
Property Management Fee
|
|
$
|
5,252,000
|
|
Lease Fees
|
|
$
|
2,686,000
|
|
Operating Expenses
|
|
$
|
828,000
|
|
On-site
Personnel and Engineering Payroll
|
|
$
|
3,039,000
|
|
Related Party Services Agreement
|
|
$
|
307,000
|
|
Compensation for Additional Services
|
|
$
|
10,000
|
|
Interest Expenses
|
|
$
|
0
|
|
As of September 30, 2009, compensation incurred but not yet
paid was approximately $1,421,000 representing normal accruals
for third quarter 2009 activities.
Greenville
Hospital Systems Financial Data and Unaudited Pro Forma
Financial Information
On September 18, 2009, we acquired a fee simple interest in
seven medical office buildings, and a leasehold interest in nine
medical office buildings in the Greenville, South Carolina area
from an unaffiliated third party for a purchase price of
$162,820,000 plus closing costs. The portfolio is primarily
leased to Greenville Hospital Systems, or GHS. Financial data
regarding GHS as well as our pro forma condensed consolidated
financial statements can be found on Appendix A attached to
this supplement.
11
Appendix
A
The following summary financial data regarding GHS is taken from
its audited year end and unaudited interim financial statements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine
|
|
|
|
|
|
|
|
|
|
|
|
|
Months Ended
|
|
|
For the Fiscal Year Ended
|
|
|
|
6/30/2009
|
|
|
9/30/2008
|
|
|
9/30/2007
|
|
|
9/30/2006
|
|
|
Consolidated Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
983,752,000
|
|
|
$
|
1,172,199,000
|
|
|
$
|
1,040,770,000
|
|
|
$
|
986,358,000
|
|
Operating Income
|
|
|
10,248,000
|
|
|
|
16,136,000
|
|
|
|
11,363,000
|
|
|
|
17,626,000
|
|
Net Income
|
|
|
13,803,000
|
|
|
|
24,924,000
|
|
|
|
25,617,000
|
|
|
|
29,008,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
As of the Fiscal Year Ended
|
|
|
|
|
|
|
6/30/2009
|
|
|
9/30/2008
|
|
|
9/30/2007
|
|
|
|
|
|
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
1,284,017,000
|
|
|
$
|
1,263,984,000
|
|
|
$
|
1,236,967,000
|
|
|
|
|
|
Total Liabilities
|
|
|
902,432,000
|
|
|
|
806,352,000
|
|
|
|
818,291,000
|
|
|
|
|
|
Stockholders Equity
|
|
|
381,585,000
|
|
|
|
457,632,000
|
|
|
|
418,676,000
|
|
|
|
|
|
A-1
Healthcare
Trust of America, Inc.
Unaudited
Pro Forma Condensed Consolidated Financial Statements
For the
Nine Months Ended September 30, 2009 and for the Year Ended
December 31, 2008
The accompanying unaudited pro forma condensed consolidated
financial statements (including notes thereto) are qualified in
their entirety by reference to and should be read in conjunction
with our September 30, 2009 Quarterly Report on
Form 10-Q
and December 31, 2008 Annual Report on
Form 10-K.
In managements opinion, all adjustments necessary to
reflect the transactions have been made.
The accompanying unaudited pro forma condensed consolidated
statements of operations for the nine months ended
September 30, 2009 and for the year ended December 31,
2008 are presented as if we acquired the Property on
January 1, 2008. The Property was acquired using proceeds,
net of offering costs, received from our initial public offering
through the acquisition date at $10.00 per share. The pro forma
adjustments assume that the offering proceeds were raised as of
January 1, 2008.
An unaudited pro forma condensed consolidated balance sheet as
of September 30, 2009 is not presented as the effect of the
acquisition of the Property is fully reflected in our historical
consolidated balance sheet as of September 30, 2009.
The accompanying unaudited pro forma condensed consolidated
financial statements are unaudited and are subject to a number
of estimates, assumptions, and other uncertainties, and do not
purport to be indicative of the actual results of operations
that would have occurred had the acquisitions reflected therein
in fact occurred on the dates specified, nor do such financial
statements purport to be indicative of the results of operations
that may be achieved in the future. In addition, the unaudited
pro forma condensed consolidated financial statements include
pro forma allocations of the purchase price of the Property
based upon preliminary estimates of the fair value of the assets
acquired and liabilities assumed in connection with the
acquisitions and are subject to change.
A-2
Healthcare
Trust of America, Inc.
Unaudited
Pro Forma Condensed Consolidated Statement of Operations
For the
Nine Months Ended September 30, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of
|
|
|
|
|
|
|
|
|
|
Greenville Hospital
|
|
|
September 30,
|
|
|
|
September 30, 2009
|
|
|
Systems
|
|
|
2009
|
|
|
|
As Reported (A)
|
|
|
Property (B)
|
|
|
Pro Forma
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income
|
|
$
|
89,914,000
|
|
|
$
|
10,285,000
|
(C)
|
|
$
|
100,199,000
|
|
Interest income from real estate notes receivable, net
|
|
|
2,128,000
|
|
|
|
|
|
|
|
2,128,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenues
|
|
|
92,042,000
|
|
|
|
10,825,000
|
|
|
|
102,327,000
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental expenses
|
|
|
32,854,000
|
|
|
|
1,309,000
|
(D)
|
|
|
34,163,000
|
|
General and administrative
|
|
|
21,955,000
|
|
|
|
(4,702,000
|
)(E)
|
|
|
17,253,000
|
|
Depreciation and amortization
|
|
|
39,231,000
|
|
|
|
2,705,000
|
(F)
|
|
|
41,936,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
94,040,000
|
|
|
|
(688,000
|
)
|
|
|
93,352,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before other income (expense)
|
|
|
(1,998,000
|
)
|
|
|
10,973,000
|
|
|
|
8,975,000
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense (including amortization of deferred financing
costs and debt discount):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense related to note payables to affiliate
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense related to mortgage loan payables and line of
credit
|
|
|
(22,001,000
|
)
|
|
|
|
(G)
|
|
|
(22,001,000
|
)
|
Gain on derivative financial instruments
|
|
|
3,357,000
|
|
|
|
|
|
|
|
3,357,000
|
|
Interest and dividend income
|
|
|
233,000
|
|
|
|
|
|
|
|
233,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
|
(20,409,000
|
)
|
|
|
10,973,000
|
|
|
|
(9,436,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net income attributable to noncontrolling interest of
limited partners
|
|
|
(241,000
|
)
|
|
|
|
|
|
|
(241,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to controlling interest
|
|
$
|
(20,650,000
|
)
|
|
$
|
10,973,000
|
|
|
$
|
(9,667,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations per share basic
and diluted
|
|
$
|
(0.20
|
)
|
|
|
|
|
|
$
|
(0.08
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares
outstanding basic and diluted
|
|
|
105,257,482
|
|
|
|
|
|
|
|
122,938,305
|
(H)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited
pro forma condensed consolidated
financial statements.
A-3
Healthcare
Trust of America, Inc.
Unaudited
Pro Forma Condensed Consolidated Statement of Operations
For the
Year Ended December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of
|
|
|
|
|
|
|
|
|
|
Greenville
|
|
|
December 31,
|
|
|
|
December 31, 2008
|
|
|
Hospital Systems
|
|
|
2008
|
|
|
|
As Reported (I)
|
|
|
Property (J)
|
|
|
Pro Forma
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income
|
|
$
|
80,415,000
|
|
|
$
|
14,998,000
|
(C)
|
|
$
|
95,413,000
|
|
Interest income from real estate notes receivable, net
|
|
|
3,000
|
|
|
|
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenues
|
|
|
80,418,000
|
|
|
|
14,998,000
|
|
|
|
95,416,000
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental expenses
|
|
|
28,174,000
|
|
|
|
1,889,000
|
(D)
|
|
|
30,063,000
|
|
General and administrative
|
|
|
9,560,000
|
|
|
|
|
(E)
|
|
|
9,560,000
|
|
Depreciation and amortization
|
|
|
37,398,000
|
|
|
|
3,945,000
|
(F)
|
|
|
41,343,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
75,132,000
|
|
|
|
10,536,000
|
|
|
|
80,966,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before other income (expense)
|
|
|
5,286,000
|
|
|
|
4,462,000
|
|
|
|
14,450,000
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense (including amortization of deferred financing
costs and debt discount):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense related to note payables to affiliate
|
|
|
(2,000
|
)
|
|
|
|
|
|
|
(2,000
|
)
|
Interest expense related to mortgage loan payables and line of
credit
|
|
|
(21,341,000
|
)
|
|
|
|
(G)
|
|
|
(21,341,000
|
)
|
Loss on derivative financial instruments
|
|
|
(12,821,000
|
)
|
|
|
|
|
|
|
(12,821,000
|
)
|
Interest and dividend income
|
|
|
469,000
|
|
|
|
|
|
|
|
469,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
|
(28,409,000
|
)
|
|
|
4,462,000
|
|
|
|
(19,245,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net income attributable to noncontrolling interest of
limited partners
|
|
|
(39,000
|
)
|
|
|
|
|
|
|
(39,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to controlling interest
|
|
$
|
(28,448,000
|
)
|
|
$
|
4,462,000
|
|
|
$
|
(19,284,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations per share basic
and diluted
|
|
$
|
(0.66
|
)
|
|
|
|
|
|
$
|
(0.32
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares
outstanding basic and diluted
|
|
|
42,844,603
|
|
|
|
|
|
|
|
60,476,409
|
(H)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited
pro forma condensed consolidated
financial statements.
A-4
Healthcare
Trust of America, Inc.
Notes to
Unaudited Pro Forma Condensed Consolidated Operations
For the
Nine Months Ended September 30, 2009 and for the Year Ended
December 31, 2008
|
|
1.
|
Notes to
Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the Nine Months Ended September 30,
2009
|
(A) Reflects our historical results of operations for the
nine months ended September 30, 2009.
(B) Amounts represent the pro forma adjustments to reflect
the operations of the Greenville Hospital Systems property for
the nine months ended September 30, 2009. There were no
other significant acquisitions in 2008 or 2009 that were
significant property acquisitions pursuant to SEC
Rule 3-14
of
Regulation S-X.
(C) Rental income includes straight line rental revenues
and tenant reimbursement income for the Property in accordance
with the respective lease agreements, as well as the
amortization of above and below market leases.
(D) Pursuant to our property management agreement,
Greenville Hospital Systems is entitled to receive, for services
in managing our property, a monthly property management fee of
up to 1.5% of the gross cash receipts of the Property. The
historical rates varied. As a result, the pro forma amounts
shown are reflective of our current property management
agreement.
Adjustments were made for an incremental property tax expense
assuming the acquisition price and historical property tax
rates. Also, adjustments were made for other rental expenses,
such as utilities, insurance, and ground lease rent.
(E) The acquisition costs are a one-time occurrence
therefore, these costs are an adjustment to the 2009 actual
results of operations.
(F) Depreciation expense on the portion of the purchase
price allocated to building is recognized using the
straight-line method and a 39 year life. Depreciation
expense on improvements is recognized using the straight-line
method over an estimated useful life between 19 and
180 months. Amortization expense on the identified
intangible assets, excluding above and below market leases, is
recognized using the straight-line method over an estimated
useful life between 19 and 180 months.
The purchase price allocations, and therefore depreciation and
amortization expense, are preliminary and subject to change.
(G) The Property was acquired using proceeds, net of
offering costs, received from our initial public offering
through the acquisition date at $10.00 per share. No debt was
incurred to finance the acquisition.
(H) Represents the weighted average number of shares of
common stock from our initial public offering required to
generate sufficient offering proceeds to fund the purchase of
the Property. The calculation assumes the Property was acquired
on January 1, 2008.
(I) Reflects our historical results of operations for the
year ended December 31, 2008.
(J) Amounts represent pro forma adjustments to reflect the
operations of the Property for the year ended December 31,
2008. There were no other significant acquisitions in 2008 or
2009 that were significant property acquisitions pursuant to SEC
Rule 3-14
of
Regulation S-X.
A-5