def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Soliciting Material Pursuant to §240.14a-12 |
NNN HEALTHCARE/OFFICE REIT, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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TABLE OF CONTENTS
NNN HEALTHCARE/OFFICE REIT,
INC.
1551 N. Tustin Avenue, Suite 200
Santa Ana, California 92705
Telephone:
(714) 667-8252
April 25, 2007
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to
attend the 2007 Annual Meeting of Stockholders of NNN
Healthcare/Office REIT, Inc. to be held on June 12, 2007 at
12:00 p.m. local time, at the Irvine Marriott, 18000 Von
Karman Avenue, Irvine, California 92612. We look forward to your
attendance.
The accompanying Notice of Annual Meeting and Proxy Statement
describe the formal business to be acted upon by the
stockholders. A report on the status of our initial public
offering and our portfolio of properties will also be presented
at the annual meeting and our stockholders will have an
opportunity to ask questions.
Your vote is very important. Regardless of the number of our
shares you own, it is very important that your shares be
represented. ACCORDINGLY, WHETHER OR NOT YOU INTEND TO BE
PRESENT AT THE ANNUAL MEETING IN PERSON, I URGE YOU TO SUBMIT
YOUR PROXY AS SOON AS POSSIBLE. You may do this by
completing, signing and dating the enclosed proxy card and
returning it via fax to
(212) 645-8046
or in the accompanying postage-paid return envelope. You also
may vote via the Internet at https://www.proxyvotenow.com/heal
or by telephone by dialing toll-free 1-866-888-4067. Please
follow the directions provided in the proxy statement. This will
not prevent you from voting in person at our annual meeting, but
will assure that your vote will be counted if you are unable to
attend our annual meeting.
YOUR VOTE COUNTS. THANK YOU FOR YOUR ATTENTION TO THIS
MATTER, AND FOR YOUR CONTINUED SUPPORT OF, AND INTEREST IN, OUR
COMPANY.
Sincerely,
Scott D. Peters
Chief Executive Officer and Chairman
NNN
HEALTHCARE/OFFICE REIT, INC.
1551 N. Tustin Avenue,
Suite 200
Santa Ana, California 92705
Telephone:
(714) 667-8252
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 12, 2007
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
of NNN Healthcare/Office REIT, Inc., a Maryland corporation,
will be held on June 12, 2007 at 12:00 p.m. local
time, at the Irvine Marriott, 18000 Von Karman Avenue, Irvine,
California 92612, for the following purposes:
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1.
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To elect six directors, each for a term of one year; and
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2.
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To ratify the selection of Deloitte & Touche LLP as our
independent registered public accounting firm for the current
fiscal year.
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These items are discussed in the following pages, which are made
part of this notice. Our stockholders of record on
April 10, 2007, are entitled to vote at the annual meeting.
A list of stockholders entitled to vote will be available for
inspection at the offices of NNN Healthcare/Office REIT, Inc.,
1551 N. Tustin Avenue, Suite 200, Santa Ana,
California 92705, for the ten day period immediately preceding
the annual meeting.
Please sign and date the accompanying proxy card and return it
promptly by fax to
(212) 645-8046
or in the enclosed postage-paid envelope whether or not you plan
to attend. You also may vote your shares electronically via the
Internet at https://www.proxyvotenow.com/heal or by telephone by
dialing toll-free 1-866-888-4067. Instructions are included with
the proxy card. If you attend the annual meeting, you may vote
in person if you wish, even if you previously have returned your
proxy card or voted your shares electronically. You may revoke
your proxy at any time prior to its exercise.
By Order of the Board of Directors
Andrea R. Biller
Executive Vice President & Secretary
NNN
HEALTHCARE/OFFICE REIT, INC.
1551 N. Tustin Avenue,
Suite 200
Santa Ana, California 92705
Telephone:
(714) 667-8252
PROXY
STATEMENT
The enclosed proxy is solicited by the Board of Directors of NNN
Healthcare/Office REIT, Inc., or NNN Healthcare/Office REIT, for
use in voting at the Annual Meeting of Stockholders to be held
on June 12, 2007 at 12:00 p.m. local time, at the
Irvine Marriott, 18000 Von Karman Avenue, Irvine, California
92612, and at any adjournment or postponement thereof, for the
purposes set forth in the attached Notice. The proxy
solicitation materials are being mailed to stockholders on or
about April 25, 2007.
About the
Meeting
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What
is the purpose of the meeting?
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At our annual meeting, stockholders will vote upon the matters
outlined in the accompanying notice of annual meeting, including:
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The election of six directors, each for a term of one year; and
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Ratification of the selection of Deloitte & Touche LLP,
or Deloitte, as our independent registered public accounting
firm for the year ending December 31, 2007.
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Management will report on the status of our initial public
offering, or our Offering, and our portfolio of properties and
respond to questions from stockholders. In addition,
representatives of Deloitte are expected to be at the annual
meeting to respond to questions.
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What
are the Board of Directors voting
recommendations?
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Unless you give other instructions on your proxy card, the
individuals named on the card as proxy holders will vote in
accordance with the recommendations of the Board of Directors.
The Board of Directors recommends that you vote your shares
FOR the election of each of the nominees of
the Board of Directors and FOR the
ratification of Deloitte as our independent registered public
accounting firm. No director has informed us that he intends to
oppose any action intended to be taken by us.
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What
happens if additional proposals are presented at the annual
meeting?
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Other than the matters described in this proxy statement, we do
not expect any additional matters to be presented for a vote at
the annual meeting. If other matters are presented and you vote
by proxy, your proxy grants the individuals named as proxy
holders the discretion to vote your shares on any additional
matters properly presented for a vote at the meeting.
Only stockholders of record at the close of business on
April 10, 2007 are entitled to receive notice of the annual
meeting and to vote the shares of common stock that they hold on
that date at the annual meeting, or any postponements or
adjournments of the annual meeting. As of the record date, we
had 3,498,501 shares of common stock issued and outstanding
and entitled to vote. Each outstanding share of common stock
entitles its holder to cast one vote on each proposal to be
voted on.
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What
constitutes a quorum?
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If a majority of the shares outstanding on the record date are
present at the annual meeting, either in person or by proxy, we
will have a quorum at the meeting, permitting the conduct of
business at the meeting. Abstentions and broker
non-vote occur when a broker, bank of other nominee
holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have
discretionary voting power with
respect to that matter and has not received voting instructions
from the beneficial owner. Abstentions and broker non-votes will
be counted to determine whether a quorum is present.
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How do
I vote my shares at the annual meeting?
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Voting by Mail Stockholders may vote by
completing the attached proxy card and mailing it in the
enclosed self-addressed postage-paid return envelope.
Voting by Fax Stockholders may vote by
completing the attached proxy card and faxing it to
(212) 645-8046
until 5:00 p.m. Pacific Daylight Time on June 11, 2007.
Voting by Telephone Stockholders may vote by
telephone by dialing toll-free at 1-866-888-4067 until
5:00 p.m. Pacific Daylight Time on June 11, 2007.
Voting by Internet Stockholders may vote
electronically using the Internet at
https://www.proxyvotenow.com/heal until 5:00 p.m. Pacific
Daylight Time on June 11, 2007.
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Can I
change my vote after I return my proxy card or after I vote by
telephone or over the Internet?
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If you are a record holder, you may change your vote at any time
before the proxy is exercised at the annual meeting by
delivering to our Secretary a written notice of revocation or a
properly signed proxy bearing a later date, or by attending the
annual meeting and voting in person (although attendance at the
meeting will not cause your previously granted proxy to be
revoked unless you specifically so request). To revoke a proxy
previously submitted by telephone or over the Internet, you may
simply vote again at a later date, but before the deadline for
telephone or Internet voting set fourth above, using the same
procedures, in which case the later submitted vote will be
recorded and the earlier vote revoked.
If you hold shares of our common stock in street
name, you will need to contact the institution that holds
your shares and follow its instructions for revoking a proxy.
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What
vote is required to approve each proposal that comes before the
annual meeting?
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To obtain approval of the election of the director nominees, the
affirmative vote of a majority of the shares of our common stock
present in person or by proxy at a meeting at which a quorum is
present must be cast in favor of the proposal. To obtain
approval of the ratification of the appointment of Deloitte, the
affirmative vote of a majority of all votes cast at a meeting at
which a quorum is present must be cast in favor of the proposal.
Abstentions and broker non-votes will count as votes against the
proposal to elect the director nominees but will have no impact
on the proposal to ratify the appointment of Deloitte.
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Who
will bear the costs of soliciting votes for the
meeting?
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NNN Healthcare/Office REIT will bear the entire cost of the
solicitation of proxies from its stockholders. We have retained
Ellen Philip Associates, Inc. to assist us in connection with
the solicitation of proxies for the annual meeting. We expect to
pay approximately $27,000 for such services. In addition to the
mailing of these proxy materials, the solicitation of proxies or
votes may be made in person, by telephone or by electronic
communication by our directors and officers who will not receive
any additional compensation for such solicitation activities. We
will also reimburse brokerage houses and other custodians,
nominees and fiduciaries for their reasonable
out-of-pocket
expenses for forwarding proxy solicitation materials to our
stockholders.
2
ELECTION
OF DIRECTORS
Background
The Board of Directors currently consists of six directors. Our
bylaws provide for a minimum of three and a maximum of
15 directors and that our directors each serve a term of
one year, but may be re-elected. The Board of Directors, acting
in its capacity as the Nominating and Governance Committee, has
nominated Scott D. Peters, W. Bradley Blair, II, Maurice J.
DeWald, Warren D. Fix, Larry L. Mathis and Gary T. Wescombe, for
a term of office commencing on the date of the 2007 annual
meeting and ending on the date of the 2008 annual meeting and
until their successors are elected and qualified. Each of the
nominees currently serves as a member of the Board of Directors.
Unless otherwise instructed on the proxy, the shares represented
by proxies will be voted FOR the election of all of the
director nominees named below. Each of the nominees has
consented to being named as a nominee in this proxy statement
and has agreed that, if elected, he will serve on the Board of
Directors for a one-year term and until his successor has been
elected and qualified. If any nominee becomes unavailable for
any reason, the shares represented by proxies may be voted for a
substitute nominee designated by the Board of Directors. We are
not aware of any family relationship among any of the nominees
to become directors or executive officers of NNN
Healthcare/Office REIT. Each of the nominees for election as
director has stated that there is no arrangement or
understanding of any kind between him and any other person
relating to his election as a director except that such nominees
have agreed to serve as our directors if elected.
Information
about Director Nominees:
Scott D. Peters, age 49, has served as our Chief
Executive Officer since April 2006, Chairman of the Board of
Directors since July 2006 and as the Chief Executive Officer of
NNN Healthcare/Office REIT Advisor, LLC, or our Advisor, since
July 2006. He has also served as the Chief Executive Officer,
President and a director of NNN Realty Advisors, Inc., or NNN
Realty Advisors, or our Sponsor, since its formation in
September 2006 and as the Chief Executive Officer of Triple Net
Properties, LLC, or Triple Net Properties, a wholly-owned
subsidiary of NNN Realty Advisors and the managing member of our
Advisor since November 2006. From September 2004 to October
2006, Mr. Peters served as the Executive Vice President and
Chief Financial Officer of Triple Net Properties. Since December
2005, Mr. Peters has also served as the Chief Executive
Officer and President of G REIT, Inc. having previously served
as its Executive Vice President and Chief Financial Officer
since September 2004. Mr. Peters has also served as the
Executive Vice President and Chief Financial Officer of T REIT,
Inc. from September 2004 to December 2006 and as a director and
Executive Vice President of NNN Apartment REIT, Inc. since April
2007 and January 2006, respectively. From February 1997 to
February 2007, Mr. Peters served as Senior Vice President,
Chief Financial Officer and a director of Golf Trust of America,
Inc., a publicly traded real estate investment trust.
Mr. Peters received his B.B.A. degree in Accounting and
Finance from Kent State University in Ohio.
W. Bradley Blair, II, age 63, has served
as a director of our company since September 2006.
Mr. Blair has served as the Chief Executive Officer,
President and Chairman of the board of directors of Golf Trust
of America, Inc. since its initial public offering in 1997. From
1993 until February 1997, Mr. Blair served as Executive
Vice President, Chief Operating Officer and General Counsel for
The Legends Group., a golf course owner, developer and operator
in the Southeast and Mid-Atlantic regions of the United States.
From 1978 to 1993, Mr. Blair was the managing partner at
Blair Conaway Bograd & Martin, P.A., a law firm
specializing in real estate, finance, taxation and acquisitions.
Mr. Blair earned a B.S. degree in Business from Indiana
University and his J.D. degree from the University of North
Carolina at Chapel Hill School of Law.
Maurice J. DeWald, age 67, has served as a director
of our company since September 2006. He has served as the
Chairman and Chief Executive Officer of Verity Financial Group,
Inc., a financial advisory firm, since 1992. Mr. DeWald
also serves as a director of Advanced Materials Group, Inc.,
Integrated Healthcare Holdings, Inc. and Mizuho Corporate Bank
of California. Mr. DeWald was an audit partner and managing
partner with the international accounting firm KPMG LLP from
1962 to 1991. Mr. DeWald holds a B.B.A. degree from the
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University of Notre Dame in Indiana and is a member of its
Mendoza School of Business Advisory Council. Mr. DeWald is
a certified public accountant in California.
Warren D. Fix, age 68, has served as a director of
our company since September 2006. He serves as the Chief
Executive Officer, Chief Financial Officer and a director of
WCH, Inc., formerly Candlewood Hotel Company, Inc., having
served as its Executive Vice President, Chief Financial Officer
and Secretary since 1995. From July 1994 to October 1995,
Mr. Fix was a consultant to Doubletree Hotels, primarily
developing debt and equity sources of capital for hotel
acquisitions and refinancings. Mr. Fix has been a partner
in The Contrarian Group, a business management company, from
December 1992 to the present. From 1989 to December 1992,
Mr. Fix served as President of the Pacific Company, a real
estate investment and development company. From 1964 to 1989,
Mr. Fix held numerous positions within The Irvine Company,
a California-based real estate and development company,
including, Chief Financial Officer. Mr. Fix also serves as
a director of Audio Visual Services Corporation. Mr. Fix
received his B.A. degree from Claremont McKenna College in
California and is a graduate of the UCLA Executive Management
Program, the Stanford Financial Management Program and the UCLA
Anderson Corporate Director Program. Mr. Fix is a certified
public accountant in California.
Larry L. Mathis, age 63, has served as a director of
our company since April 2007. He has served as an executive
consultant since 1998 with D. Petersen & Associates,
providing counsel to select clients on leadership, management,
governance and strategy. He has served in various capacities
within The Methodist Hospital System, located in Houston, Texas,
for 27 years prior to joining D. Petersen &
Associates, including consultant to the Chairman of the board of
The Methodist Hospital System from 1997 to 1998, President and
Chief Executive Officer, as well as a member of the board of
directors from 1983 to 1997. Mr. Mathis has also served as
a member of the board of directors of Alexion Pharmaceuticals,
Inc. a NASDAQ-listed company since 2004. Mr. Mathis
received a B.A. degree in Social Sciences from Pittsburg State
University in Kansas and his M.A. degree in Health
Administration from Washington University in Missouri.
Gary T. Wescombe, age 64, has served as a director
of our company since October 2006. He provides consulting
services to various entities in the real estate sector and is a
principal of American Oak Properties, LLC, a real estate
investment company. He is also a director, Chief Financial
Officer and Treasurer of the Arnold and Mabel Beckman
Foundation, a nonprofit foundation established for the purpose
of supporting scientific research. From October 1999 to December
2001, he was a partner in Warmington Wescombe Realty Partners in
Costa Mesa, California. Prior to retiring in 1999,
Mr. Wescombe was a Partner with Ernst & Young, LLP
(previously Kenneth Leventhal & Company) from 1970 to
1999. In addition, Mr. Wescombe has also served as a
director of G REIT, Inc. since December 2001. Mr. Wescombe
received a B.S. degree in Accounting and Finance from California
State University, San Jose in 1965 and is a member of the
American Institute of Certified Public Accountants and
California Society of Certified Public Accountants.
The Board of Directors recommends a vote FOR all of the
nominees for election as directors.
Information regarding our executive officers is set forth below:
For biographical information regarding Mr. Peters, our
Chief Executive Officer, see Information about
Director Nominees above.
Shannon K S Johnson, age 29, has served as our Chief
Financial Officer since August 2006. Ms. Johnson has also
served as a financial reporting manager for Triple Net
Properties since January 2006 and has served as the Chief
Financial Officer of NNN Apartment REIT, Inc. since April 2006.
From June 2002 to January 2006, Ms. Johnson gained public
accounting and auditing experience while employed as an auditor
with PricewaterhouseCoopers LLP. Prior to joining
PricewaterhouseCoopers LLP, from September 1999 to June 2002,
Ms. Johnson worked as an auditor with Arthur Andersen LLP,
where she worked on the audits of a variety of public and
private entities. Ms. Johnson is a certified public
accountant in California and graduated summa cum laude
with her B.A. degree in Business-Economics and a minor in
Accounting from the University of California, Los Angeles.
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Andrea R. Biller, age 57, has served as our
Executive Vice President and Secretary since April 2006 and as
the Executive Vice President of our Advisor since July 2006. She
has also served as General Counsel, Executive Vice President and
Secretary of NNN Realty Advisors since its formation in
September 2006. She has served as General Counsel for Triple Net
Properties since March 2003 and as its Executive Vice President
since January 2007. Ms. Biller has also served as the
Secretary and Executive Vice President of G REIT, Inc. since
June 2004 and December 2005, respectively, the Secretary of T
REIT, Inc. since May 2004 and the Secretary of NNN Apartment
REIT, Inc. since January 2006. Ms. Biller practiced as a
private attorney specializing in securities and corporate law
from 1990 to 1995 and 2000 to 2002. She practiced at the
Securities and Exchange Commission, or the SEC, from 1995 to
2000, including two years as special counsel for the Division of
Corporation Finance. Ms. Biller earned a B.A. degree in
Psychology from Washington University, a M.A. degree in
Psychology from Glassboro State University in New Jersey and a
J.D. degree from George Mason University School of Law in
Virginia in 1990. Ms. Biller is a member of the California,
Virginia and the District of Columbia State Bar Associations.
Danny Prosky, age 42, serves as our Vice
President Acquisitions. He has served as Triple Net
Properties Managing Director Health Care
Properties since March 2006 and is responsible for all medical
property acquisitions, management and dispositions.
Mr. Prosky previously worked with Health Care Property
Investors, Inc., a healthcare-focused real estate investment
trust, where he served as the Assistant Vice
President Acquisitions & Dispositions from
2005 to March 2006, and as Assistant Vice President
Asset Management from 1999 to 2005. From 1992 to 1999, he served
as the Manager, Financial Operations, Multi-Tenant Facilities
for American Health Properties, Inc., a healthcare-focused
self-administered real estate investment trust. Mr. Prosky
received a B.S. degree in Finance from the University of
Colorado and a M.S. degree in Management from Boston University.
Board of
Directors
The Board of Directors held two meetings during the fiscal year
ended December 31, 2006. Each of the directors attended
100% of the aggregate of the total number of meetings of the
Board of Directors held during the period for which he served as
a director and the total number of meetings held by all
committees of the Board on which he served during the periods in
which he served.
Director
Attendance at annual meetings
Although we have no policy with regard to attendance by the
members of the Board of Directors at our annual meeting of
stockholders, we invite and encourage the members of the Board
of Directors to attend annual meetings to foster communication
between stockholders and the Board of Directors.
Contacting
the Board of Directors
Any stockholder who desires to contact members of the Board of
Directors may do so by writing to: NNN Healthcare/Office REIT,
Inc., the Board of Directors, 1551 N. Tustin Avenue,
Suite 200, Santa Ana, California 92705, Attention:
Secretary. Communications received will be distributed by our
Secretary to such member or members of the Board of Directors as
deemed appropriate by our Secretary, depending on the facts and
circumstances outlined in the communication received. For
example, if any questions regarding accounting, internal
accounting controls and auditing matters are received, they will
be forwarded by the Secretary to the Audit Committee for review.
Director
Independence
We have a six-member Board of Directors. One of our directors,
Scott D. Peters, is affiliated with us and we do not consider
him to be an independent director. The five remaining directors
qualify as independent directors as defined in our
charter in compliance with the requirements of the North
American Securities Administrators Associations Statement
of Policy Regarding Real Estate Investment Trusts. Our charter
provides that a majority of the directors must be
independent directors. As defined in our charter,
the term independent
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director means a director who is not on the date of
determination, and within the last two years from the date of
determination has not been, directly or indirectly associated
with NNN Realty Advisors, our Sponsor or NNN Healthcare/Office
REIT Advisor, our Advisor by virtue of (i) ownership of an
interest in our Sponsor, our Advisor or any of their affiliates,
other than the Corporation; (ii) employment by our Sponsor,
our Advisor or any of their affiliates; (iii) service as an
officer or director of our Sponsor, our Advisor or any of their
affiliates, other than as a director; (iv) performance of
services, other than as a director; (v) service as a
director or trustee of more than three real estate investment
trusts, or REITs, organized by our Sponsor or advised by our
Advisor; or (vi) maintenance of a material business or
professional relationship with our Sponsor, our Advisor or any
of their affiliates.
Each of our independent directors would also qualify as
independent under the rule of the New York Stock Exchange and
our Audit Committee members would qualify as independent under
the New York Stock Exchanges rules applicable to Audit
Committee members. However, we are not listed on the New York
Stock Exchange.
Committees
of the Board of Directors
We have one standing committee, the Audit Committee. From time
to time the Board may establish certain other committees to
facilitate the management of our company.
Audit Committee. The Audit Committees
primary function is to assist the Board of Directors in
fulfilling its oversight responsibilities by reviewing the
financial information to be provided to the stockholders and
others, the system of internal controls which management has
established, and the audit and financial reporting process. The
Audit Committee is responsible for the selection, evaluation
and, when necessary, replacement of our independent registered
public accounting firm. Under our Audit Committee charter, the
Audit Committee will always be comprised solely of independent
directors. As of April 10, 2007, the Audit Committee is
comprised of W. Bradley Blair, II, Maurice J. DeWald,
Warren D. Fix and Gary T. Wescombe, all of whom are independent
directors. Mr. DeWald currently serves as the Chairman of
the committee and has been designated as the Audit Committee
financial expert.
The Audit Committee operates under a written charter, which was
adopted by the Board of Directors on September 20, 2006.
The Audit Committee held two meetings during the fiscal year
ended December 31, 2006.
Subsequent to the 2006 year end, the Audit Committee
reviewed and discussed the 2006 year-end audited financial
statements with our management and discussed with Deloitte, our
independent registered public accounting firm for fiscal year
2006, the matters required to be discussed by the statement on
Auditing Standards No. 61, as amended. In addition, the
Audit Committee received the written disclosures and the letter
from Deloitte required by Independence Standards Board Standard
No. 1 and discussed the accountants independence with
Deloitte. Based on the review and discussions noted above, the
Audit Committee recommended to the Board of Directors that the
2006 year-end audited financial statements be included in
our Annual Report on
Form 10-K,
filed with the SEC on March 2, 2007.
Compensation Committee. We do not have a
Compensation Committee because we do not plan to pay any
compensation to our officers. However, if in the future we
provide any compensation to our officers, we will establish a
Compensation Committee comprised entirely of independent
directors to determine the nature and amount of such
compensation.
Nominating and Corporate Governance
Committee. We do not have a separate Nominating and
Corporate Governance Committee. We believe that our Board of
Directors is qualified to perform the functions typically
delegated to a Nominating and Corporate Governance Committee and
that the formation of a separate committee is not necessary at
this time. Instead, the full Board of Directors performs
functions similar to those which might otherwise normally be
delegated to such a committee, including, among other things,
developing a set of corporate governance principles, adopting a
code of ethics, adopting policies with respect to conflicts of
interest, monitoring our compliance with corporate governance
requirements of state and federal law, establishing criteria for
prospective members of the Board of Directors, conducting
candidate searches and interviews, overseeing and evaluating the
Board of Directors and our management, evaluating from time to
time the appropriate size and composition of the Board of
Directors and recommending, as appropriate, increases, decreases
and changes to the
6
composition of the Board of Directors and formally proposing the
slate of directors to be elected at each annual meeting of our
stockholders.
The Board of Directors will consider nominees for our Board of
Directors recommended by stockholders. Notice of proposed
stockholder nominations for director must be delivered not less
than 120 days prior to any meeting at which directors are
to be elected. Nominations must include the full name of the
proposed nominee, a brief description of the proposed
nominees business experience for at least the previous
five years and a representation that the nominating stockholder
is a beneficial or record owner of our common stock. Any such
submission must be accompanied by the written consent of the
proposed nominee to be named as a nominee and to serve as a
director if elected. Nominations should be delivered to: NNN
Healthcare/Office REIT, Inc., the Board of Directors,
1551 N. Tustin Avenue, Suite 200, Santa Ana,
California 92705, Attention: Secretary.
In considering possible candidates for election as a director,
the Board of Directors is guided by the principle that each
director should (i) be an individual of high character and
integrity; (ii) be accomplished in his or her respective
field, with superior credentials and recognition;
(iii) have relevant expertise and experience upon which to
be able to offer advice and guidance to management;
(iv) have sufficient time available to devote to our
affairs; (v) represent the long-term interests of our
stockholders as a whole; and (vi) represent a diversity of
background and experience.
Qualified candidates for membership on the Board of Directors
will be considered without regard to race, color, religion,
gender, ancestry, national origin or disability. The Board of
Directors will review the qualifications and backgrounds of
directors and nominees (without regard to whether a nominee has
been recommended by stockholders), as well as the overall
composition of the Board, and recommend the slate of directors
to be nominated for election at the annual meeting of
stockholders. We do not currently employ or pay a fee to any
third party to identify or evaluate, or assist in identifying or
evaluating, potential director nominees.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Executive
Compensation
We have no employees. Our
day-to-day
management functions are performed by employees of our Advisor
and its affiliates. The individuals who serve as our executive
officers do not receive compensation directly from us for
services rendered to us, and we do not currently intend to pay
any compensation directly to our executive officers. As a
result, we do not have, and our Board of Directors has not
considered, a compensation policy or program for our executive
officers and has not included a Compensation Discussion and
Analysis in this proxy statement.
Each of our executive officers, including those officers who
serve as directors, is employed by our Advisor or its
affiliates, and is compensated by these entities for their
services to us. We pay these entities fees and reimburse
expenses pursuant to our advisory agreement between us, our
Advisor and Triple Net Properties, or the Advisory Agreement.
Option/SAR
Grants in Last Fiscal Year
No option grants were made to officers and directors for the
year ended December 31, 2006.
Director
Compensation
Pursuant to the terms of our director compensation program,
which are contained in our 2006 Independent Directors
Compensation Plan, a
sub-plan of
our 2006 Incentive Plan, our independent directors receive the
following forms of compensation:
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Annual Retainer. Our independent directors receive
an annual retainer of $36,000.
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Meeting Fees. Our independent directors receive
$1,000 for each board meeting attended in person or by
telephone, $500 for each committee meeting attended in person or
by telephone, and an additional $500 to the Audit Committee
chair for each Audit Committee meeting attended in person or by
telephone. If a
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7
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board meeting is held on the same day as a committee meeting, an
additional fee will not be paid for attending the committee
meeting.
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Equity Compensation. Upon initial election to the
Board of Directors, each independent director receives
5,000 shares of restricted common stock, and an additional
2,500 shares of restricted common stock upon his or her
subsequent election each year. The restricted shares will vest
as to 20.0% of the shares on the date of grant and on each
anniversary thereafter over four years from the date of grant.
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Other Compensation. We reimburse our directors for
reasonable
out-of-pocket
expenses incurred in connection with attendance at meetings,
including committee meetings, of the Board of Directors.
Independent directors do not receive other benefits from us.
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Our non-independent director does not receive any compensation
from us.
The following table sets forth the compensation earned by our
directors from us in 2006:
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Change in
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Pension
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Value and
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Fees
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Nonqualified
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Earned or
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Non-Equity
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Deferred
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Paid in
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
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Name
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Cash ($)
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Awards ($)
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Awards ($)
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Compensation ($)
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Earnings ($)
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Compensation ($)
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Total ($)
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(a)
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(b)(1)
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(c)(2)
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(d)
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(e)
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(f)
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(g)
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(h)
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Scott D. Peters(3)
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$
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$
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$
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$
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$
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$
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$
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W. Bradley Blair, II
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$
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14,500
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$
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12,778
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$
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$
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$
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$
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$
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27,278
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Maurice J. DeWald
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$
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15,000
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$
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12,778
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$
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$
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$
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$
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$
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27,778
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Warren D. Fix
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$
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14,500
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$
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12,778
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$
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$
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$
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$
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$
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27,278
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Gary T. Wescombe
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$
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10,500
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$
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12,391
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$
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$
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$
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$
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$
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22,891
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Larry L. Mathis(4)
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$
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$
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$
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$
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$
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$
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$
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(1) |
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Consists of the amounts described below. |
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Basic Annual
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Director
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Role
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Retainer ($)
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Meeting Fees ($)
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Peters(3)
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Chairman of the Board of Directors
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$
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$
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Blair
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Member, Audit Committee
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$
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12,000
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$
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2,500
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DeWald
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Chairman, Audit Committee
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$
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12,000
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$
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3,000
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Fix
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Member, Audit Committee
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$
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12,000
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$
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2,500
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Wescombe
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Member, Audit Committee
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$
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9,000
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$
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1,500
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Mathis(4)
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Member
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$
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$
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(2) |
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The amounts in this column represent the proportionate amount of
the total fair value of stock awards recognized by the Company
in 2006 for financial accounting purposes, disregarding for this
purpose the estimate of forfeitures related to service-based
vesting conditions. The amounts included in the table for each
award include the amount recorded as expense in our statement of
operations for the period from April 28, 2006 (Date of
Inception) through December 31, 2006. The fair values of
these awards and the amounts expensed in 2006 were determined in
accordance with Statement of Financial Accounting Standards, or
SFAS, No. 123(R), Share-Based Payment, or
SFAS No. 123(R). |
8
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The following table shows the shares of restricted common stock
awarded to each independent director during 2006, and the
aggregate grant date fair value for each award (computed in
accordance with SFAS No. 123(R)). |
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Full Grant
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Date Fair
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Number of
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Value of
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Restricted
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Award
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Director
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Grant Date
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Shares (#)
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($)
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Peters(3)
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$
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Blair
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9/20/06
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5,000
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$
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50,000
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DeWald
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9/20/06
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5,000
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$
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50,000
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Fix
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9/20/06
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5,000
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$
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50,000
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Wescombe
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10/4/06
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5,000
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$
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50,000
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Mathis(4)
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$
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The following table shows the aggregate numbers of nonvested
restricted shares of common stock held by each director as of
December 31, 2006:
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Nonvested
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Director
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Restricted Stock
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Peters(3)
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Blair
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4,000
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DeWald
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4,000
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Fix
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4,000
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Wescombe
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4,000
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Mathis(4)
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(3)
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Mr. Peters is not an independent director and did not
receive any compensation from us as a director.
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(4)
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Mr. Mathis was appointed to serve as a member of the Board
of Directors on April 12, 2007 and did not receive any
compensation from us in 2006.
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2006
Incentive Plan and Independent Directors Compensation
Plan
Under the terms of our 2006 Incentive Plan, the aggregate number
of shares of our common stock subject to options, restricted
shares of common stock, stock purchase rights, stock
appreciation rights or other awards, including those issuable
under its
sub-plan,
the 2006 Independent Directors Compensation Plan, will be no
more than 2,000,000 shares.
On September 20, 2006 and October 4, 2006, we granted
15,000 shares and 5,000 shares, respectively, of
restricted common stock, to our independent directors under the
2006 Independent Directors Compensation Plan, of which 20.0%
vested on the grant date and 20.0% will vest on each of the
first four anniversaries of the date of grant. The fair value of
each share of restricted common stock was estimated at the date
of grant at $10.00 per share, the per share price of shares
in our Offering, and is amortized on a straight-line basis.
Shares of restricted common stock may not be sold, transferred,
exchanged, assigned, pledged, hypothecated or otherwise
encumbered. Such restrictions expire upon vesting. We recognized
compensation expense of approximately $51,000 related to the
restricted common stock grants for the period from
April 28, 2006 (Date of Inception) through
December 31, 2006. Shares of restricted common stock have
full voting rights and rights to dividends.
As of December 31, 2006, there was approximately $149,000
of total unrecognized compensation expense, net of estimated
forfeitures, related to non-vested restricted shares of common
stock. The expense is expected to be realized over a weighted
average period of approximately three years and nine months.
As of December 31, 2006, the fair value of the non-vested
restricted shares of common stock was $160,000.
9
Incentive
Stock Plan
Although we currently do not have any employees and do not
currently intend to hire any employees, we have adopted an
incentive stock plan, which we will use to attract and retain
qualified independent directors, any employees we may hire in
the future and consultants providing services to us who are
considered essential to our long-term success, by offering these
individuals an opportunity to participate in our growth through
awards in the form of, or based on, our common stock.
The incentive stock plan provides for the granting of awards to
participants in the following forms to those independent
directors, employees and consultants selected by the plan
administrator for participation in the incentive stock plan:
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options to purchase shares of our common stock, which may be
nonstatutory stock options or incentive stock options under the
U.S. tax code;
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stock appreciation rights, which give the holder the right to
receive the difference between the fair market value per share
on the date of exercise over the grant price;
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performance awards, which are payable in cash or stock upon the
attainment of specified performance goals;
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restricted stock, which is subject to restrictions on
transferability and other restrictions set by the Board of
Directors or a committee thereof;
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restricted stock units, which give the holder the right to
receive shares of stock, or the equivalent value in cash or
other property, in the future;
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deferred stock units, which give the holder the right to receive
shares of stock, or the equivalent value in cash or other
property, at a future time;
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dividend equivalents, which entitle the participant to payments
equal to any dividends paid on the shares of stock underlying an
award; and/or
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other stock based awards at the discretion of the plan
administrator, including unrestricted stock grants.
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The maximum number of shares of our common stock that may be
issued upon the exercise or grant of an award under the
incentive stock plan is 2,000,000 shares. In the event of a
nonreciprocal corporate transaction that causes the per-share
value of our common stock to change, such as a stock dividend,
stock split, spin-off, rights offering or large nonrecurring
cash dividend, the share authorization limits of the incentive
stock plan will be adjusted proportionately.
EQUITY
COMPENSATION PLAN INFORMATION
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Number of Securities
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|
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to be Issued Upon
|
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Weighted Average
|
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Exercise of
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Exercise Price of
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Number of Securities
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Outstanding Options,
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Outstanding Options,
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Remaining Available for
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Plan Category
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Warrants and Rights
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Warrants and Rights
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Future Issuance
|
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Equity compensation plans approved
by security holders(1)
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1,980,000
|
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Equity compensation plans not
approved by security holders
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total
|
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|
|
|
|
|
|
|
|
|
1,980,000
|
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|
|
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|
|
|
|
|
|
|
|
|
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(1) |
On September 20, 2006 and October 4, 2006, we granted
15,000 shares and 5,000 shares, respectively, of
restricted common stock, as defined in the 2006 Incentive Plan,
to our independent directors under the 2006 Independent
Directors Compensation Plan. Such shares are not shown in the
chart above as they are deemed outstanding shares of our common
stock; however such grants reduce the number of securities
remaining available for future issuance.
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10
The following table shows, as of April 10, 2007, the amount
of shares of our common stock beneficially owned by (1) any
person who is known by us to be the beneficial owner of more
than 5.0% of the outstanding shares of our common stock;
(2) our directors; (3) our chief executive officer;
and (4) all of our directors and executive officers as a
group. The percentage of common stock beneficially owned is
based on 3,498,501 shares of our common stock outstanding
as of April 10, 2007. Beneficial ownership is determined in
accordance with the rules of the SEC and generally includes
securities over which a person has voting or investment power
and securities that a person has the right to acquire within
60 days.
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Number of Shares
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Name of Beneficial Owners(1)
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Beneficially Owned
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Percentage
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Scott D. Peters(2)
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200
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*
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W. Bradley Blair, II(3)
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5,000
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*
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Maurice J. DeWald(3)
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5,000
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*
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Warren D. Fix(3)
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5,052
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|
*
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Gary T. Wescombe(3)
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5,000
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*
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Larry L. Mathis(4)
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All directors and executive
officers as a group (9 persons)
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23,252
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*
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*
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Represents less than 1.0% of our outstanding common stock.
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(1)
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The address of each beneficial owner listed is c/o NNN
Healthcare/Office REIT, Inc., 1551 N. Tustin Avenue,
Suite 200, Santa Ana, California 92705.
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(2)
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Includes 200 shares of our common stock owned by our
Advisor. Scott D. Peters is the Chief Executive Officer of our
Advisor. Our Advisor also owns 20,000 units of NNN
Healthcare/Office REIT Holdings, L.P., or our Operating
Partnership.
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(3)
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Includes vested and non-vested shares of restricted common stock.
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(4)
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Mr. Mathis was appointed to serve as a member of the Board
of Directors on April 12, 2007. In connection with his
initial appointment as an independent director, Mr. Mathis
will receive 5,000 shares of vested and non-vested
restricted stock.
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Section 16(a)
Beneficial Ownership Reporting Compliance
Our executive officers, directors and greater than 10.0%
stockholders are not currently subject to the beneficial
ownership reporting requirements pursuant to Section 16(a)
of the Exchange Act, and therefore no reports were filed in 2006
pursuant to Section 16(a).
11
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Some of our executive officers and our non-independent director
are also executive officers
and/or
holders of direct or indirect interests in our Advisor, NNN
Realty Advisors, Triple Net Properties, or other affiliated
entities. Triple Net Properties owns a 75.0% managing member
interest in our Advisor. NNN Healthcare/Office Management, LLC
owns a 25.0% non-managing member interest in our Advisor. The
members of NNN Healthcare/Office Management, LLC include Scott
D. Peters, our Chief Executive Officer and Chairman of the Board
of Directors, our Advisors Chief Executive Officer, NNN
Realty Advisors Chief Executive Officer and director, and
Triple Net Properties Chief Executive Officer; Andrea R.
Biller, our Executive Vice President and Secretary, our
Advisors Executive Vice President, NNN Realty
Advisors Executive Vice President, Secretary and General
Counsel, and Triple Net Properties Executive Vice
President and General Counsel; and Triple Net Properties for the
benefit of other employees who perform services for us. Each of
Mr. Peters and Ms. Biller own an 18.0% membership
interest in NNN Healthcare/Office Management, LLC. Anthony W.
Thompson, the Chairman of the board of directors of NNN Realty
Advisors, is a special member of NNN Healthcare/Office
Management, LLC and may receive compensation of up to $175,000
annually.
Upon the effectiveness of our best efforts initial public
offering, we entered into the Advisory Agreement and a dealer
manager agreement, or the Dealer Manager Agreement, with NNN
Capital Corp., or our Dealer Manager. These agreements entitle
our Advisor, our Dealer Manager and their affiliates to
specified compensation for certain services with regard to our
Offering and the investment of funds in real estate assets,
among other services, as well as reimbursement of organizational
and offering expenses incurred.
Offering
Stage
Our Dealer Manager will receive selling commissions up to 7.0%
of the gross offering proceeds from the sale of shares of our
common stock in our Offering. Our Dealer Manager may re-allow
all or a portion of these fees to participating broker-dealers.
Our Dealer Manager did not receive selling commissions for the
period from April 28, 2006 (Date of Inception) through
December 31, 2006. Selling commissions are not recorded in
our accompanying consolidated financial statements because such
commissions were not our liability since we had not raised the
minimum offering as of December 31, 2006. When recorded by
us, such commissions will be charged to stockholders
equity as such amounts are paid to our Dealer Manager from the
gross proceeds of our Offering.
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Marketing
Support Fee and Due Diligence Expense Reimbursement
|
Our Dealer Manager may receive non-accountable marketing support
fees up to 2.5% of the gross offering proceeds from the sale of
shares of our common stock in our Offering and may re-allow up
to 1.5% of these fees to participating broker-dealers. In
addition, we may reimburse our Dealer Manager or its affiliates
an additional accountable 0.5% of gross offering proceeds for
bona fide due diligence expenses and may re-allow up to 0.5% of
these fees to participating broker-dealers. Our Dealer Manager
or its affiliates did not receive marketing support fees or due
diligence expense reimbursements for the period from
April 28, 2006 (Date of Inception) through
December 31, 2006. Marketing support fees and due diligence
expense reimbursements are not recorded in our accompanying
consolidated financial statements because such fees and
reimbursements were not our liability since we had not raised
the minimum offering as of December 31, 2006. When recorded
by us, such fees and reimbursements will be charged to
stockholders equity as such amounts are reimbursed to our
Dealer Manager or its affiliates from the gross proceeds of our
Offering.
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Other
Organizational and Offering Expenses
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Our organizational and offering expenses are paid by our Advisor
or Triple Net Properties on our behalf. Our Advisor or Triple
Net Properties may be reimbursed for actual expenses incurred
for up to 1.5% of the gross offering proceeds for the shares
sold under our Offering. No reimbursements were made to our
Advisor or Triple Net Properties for the period from
April 28, 2006 (Date of Inception) through
December 31, 2006 for other organizational and offering
expenses. Other organizational and offering expenses are not
recorded in our accompanying consolidated financial statements
because such expenses were not our liability since we had not
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raised the minimum offering as of December 31, 2006. When
recorded by us, organizational expenses will be expensed as
incurred and offering expenses will be charged to
stockholders equity as such amounts are reimbursed to our
Advisor or Triple Net Properties from the gross proceeds of our
Offering.
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Acquisition
and Development Stage
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Our Advisor or its affiliates will receive, as compensation for
services rendered in connection with the investigation,
selection and acquisition of properties, an acquisition fee up
to 3.0% of the contract purchase price for each property
acquired or up to 4.0% of the total development cost of any
development property acquired, as applicable. For the period
from April 28, 2006 (Date of Inception) through
December 31, 2006, we did not incur such fees.
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Reimbursement
of Acquisition Expenses
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Our Advisor or its affiliates will be reimbursed for acquisition
expenses related to selecting, evaluating, acquiring and
investing in properties, which will not exceed 0.5% of the
purchase price of the properties. The reimbursement of
acquisition fees and expenses, including real estate commissions
paid to unaffiliated parties, will not exceed, in the aggregate,
6.0% of the purchase price or total development costs, unless
fees in excess of such limits are approved by a majority of our
disinterested independent directors. For the period from
April 28, 2006 (Date of Inception) through
December 31, 2006, we did not incur such expenses.
Our Advisor or its affiliates will be paid a monthly fee for
services rendered in connection with the management of our
assets equal to one-twelfth of 1.0% of the average invested
assets calculated as of the close of business on the last day of
each month, subject to our stockholders receiving annualized
distributions in an amount equal to 5.0% per annum on
average invested capital. For the period from April 28,
2006 (Date of Inception) through December 31, 2006, we did
not incur such fees.
Our Advisor or its affiliates will be paid a monthly property
management fee equal to 4.0% of the gross cash receipts from
each property managed. For properties managed by other third
parties besides our Advisor or its affiliates, our Advisor or
its affiliates will be paid up to 1.0% of the gross cash
receipts from the property for a monthly oversight fee. In
addition, our Advisor or its affiliates may be paid a separate
fee for any leasing activities in an amount not to exceed the
fee customarily charged in arms length transactions by
others rendering similar services in the same geographic area
for similar properties as determined by a survey of brokers and
agents in such area. For the period from April 28, 2006
(Date of Inception) through December 31, 2006, we did not
incur such fees.
Our Advisor or its affiliates will be reimbursed for expenses
incurred in rendering its services, subject to certain
limitations. Fees and costs reimbursed to our Advisor or its
affiliates cannot exceed the greater of: (1) 2.0% of our
average invested assets, as defined in the Advisory Agreement,
or (2) 25.0% of our net income, as defined in the Advisory
Agreement. For the period from April 28, 2006 (Date of
Inception) through December 31, 2006, Triple Net Properties
incurred $312,000 on our behalf. As of December 31, 2006,
we had not reimbursed our Advisor or its affiliates for such
expenses.
Our Advisor or its affiliates will be paid, for a substantial
amount of services relating to a sale of one or more properties,
a disposition fee up to the lesser of 1.75% of the contract
sales price or 50.0% of a customary competitive real estate
commission given the circumstances surrounding the sale, in each
case as determined by our board of directors and will not exceed
market norms. The amount of disposition fees paid, including
real
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estate commissions paid to unaffiliated parties, will not exceed
the lesser of the customary competitive disposition fee or an
amount equal to 6.0% of the contract sales price. For the period
from April 28, 2006 (Date of Inception) through
December 31, 2006, we did not incur such fees.
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Subordinated
Participation Interest
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Subordinated
Distribution of Net Sales Proceeds
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Upon liquidation of our portfolio, our Advisor will be paid a
subordinated distribution of net sales proceeds. The
distribution will be equal to 15.0% of the net proceeds from the
sales of properties, after subtracting distributions to our
stockholders of (1) their initial contributed capital (less
amounts paid to repurchase shares pursuant to our share
repurchase program) plus (2) an annual cumulative,
non-compounded return of 8.0% on average invested capital.
Actual amounts depend upon the sales prices of properties upon
liquidation. For the period from April 28, 2006 (Date of
Inception) through December 31, 2006, we did not incur such
distributions.
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Subordinated
Distribution Upon Listing
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Upon the listing of shares of our common stock on a national
securities exchange, our Advisor will be paid a distribution
equal to 15.0% of the amount by which (1) the market value
of our outstanding common stock at listing plus distributions
paid prior to listing exceeds (2) the sum of total amount
of capital raised from stockholders (less amounts paid to
repurchase shares pursuant to our share repurchase plan) and the
amount of cash that, if distributed to stockholders as of the
date of listing, would have provided them an annual 8.0%
cumulative, non-compounded return on average invested capital
through the date of listing. Actual amounts depend upon the
market value of shares of our common stock at the time of
listing, among other factors. For the period from April 28,
2006 (Date of Inception) through December 31, 2006, we did
not incur such distributions.
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Subordinated
Distribution Upon Termination
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Upon termination of the Advisory Agreement, other than a
termination by us for cause, our Advisor will be entitled to
receive a distribution from our Operating Partnership, in an
amount equal to 15.0% of the amount, if any, by which
(1) the fair market value of all of the assets of our
Operating Partnership as of the date of the termination
(determined by appraisal), less any indebtedness secured by such
assets, plus the cumulative distributions made to us by our
Operating Partnership from our inception through the termination
date, exceeds (2) the sum of the total amount of capital
raised from stockholders (less amounts paid to redeem shares
pursuant to our share repurchase plan) plus an annual 8.0%
cumulative, non-compounded return on average invested capital
through the termination date. However, our Advisor will not be
entitled to this distribution if shares of our common stock have
been listed on a national securities exchange prior to the
termination of the Advisory Agreement. For the period from
April 28, 2006 (Date of Inception) through
December 31, 2006, we did not incur such distributions.
As of December 31, 2006, approximately $312,000 was payable
to Triple Net Properties, primarily for the reimbursement of
insurance premiums.
Certain
Conflict Resolution Restrictions and Procedures
In order to reduce or eliminate certain potential conflicts of
interest, our charter and the Advisory Agreement contain
restrictions and conflict resolution procedures relating to
(1) transactions we enter into with our Advisor, our
directors or their respective affiliates; (2) certain
future offerings; and (3) allocation of properties among
affiliated entities. Each of the restrictions and procedures
that applies to transactions with our Advisor and its affiliates
will also apply to any transaction with any entity or real
estate program advised, managed or controlled by NNN Realty
Advisors and its affiliates. These restrictions and procedures
include, among others, the following:
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Except as otherwise described in our Registration Statement on
Form
S-11(File
No. 333-133652,
effective September 20, 2006) filed with the
Securities and Exchange Commission, or the SEC, or
our
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Offering prospectus, we will not accept goods or services from
our Advisor or its affiliates unless a majority of our
directors, including a majority of the independent directors,
not otherwise interested in the transactions, approve such
transactions as fair, competitive and commercially reasonable to
us and on terms and conditions not less favorable to us than
those available from unaffiliated third parties.
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We will not purchase or lease any asset (including any property)
in which our Advisor, any of our directors or any of their
respective affiliates has an interest without a determination by
a majority of our directors, including a majority of the
independent directors, not otherwise interested in such
transaction, that such transaction is fair and reasonable to us
and at a price to us no greater than the cost of the property to
our Advisor, such director or directors or any such affiliate,
unless there is substantial justification for any amount that
exceeds such cost and such excess amount is determined to be
reasonable. In no event will we acquire any such asset at an
amount in excess of its appraised value. We will not sell or
lease assets to our Advisor any of our directors or any of their
respective affiliates unless a majority of our directors,
including a majority of the independent directors, not otherwise
interested in the transaction, determine the transaction is fair
and reasonable to us, which determination will be supported by
an appraisal obtained from a qualified, independent appraiser
selected by a majority of our independent directors.
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We will not make any loans to our Advisor, any of our directors
or any of their respective affiliates. In addition, any loans
made to us by our Advisor, our directors or any of their
respective affiliates must be approved by a majority of our
directors, including a majority of the independent directors,
not otherwise interested in the transaction, as fair,
competitive and commercially reasonable, and no less favorable
to us than comparable loans between unaffiliated parties.
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Our Advisor and its affiliates shall be entitled to
reimbursement, at cost, for actual expenses incurred by them on
our behalf or on behalf of joint ventures in which we are a
joint venture partner, subject to the limitation on
reimbursement of operating expenses to the extent that they
exceed the greater of 2.0% of our average invested assets or
25.0% of our net income, as described above.
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Our Advisory Agreement provides that if Triple Net Properties
identifies an opportunity to make an investment in one or more
office buildings or other facilities for which greater than
50.0% of the gross leaseable area is leased to, or reasonably
expected to be leased to, one or more medical or
healthcare-related tenants, either directly or indirectly
through an affiliate or in a joint venture or other co-ownership
arrangement, for itself or for any other Triple Net Properties
program, then Triple Net Properties will provide us with the
first opportunity to purchase such investment. Triple Net
Properties will provide all necessary information related to
such investment to our Advisor, in order to enable our Board of
Directors to determine whether to proceed with such investment.
Our Advisor will present the information to our Board of
Directors within three business days of receipt from Triple Net
Properties. If our Board of Directors does not affirmatively
authorize our Advisor to proceed with the investment on our
behalf within seven days of receipt of such information from our
Advisor, then Triple Net Properties may proceed with the
investment opportunity for its own account or offer the
investment opportunity to any other person or entity.
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RATIFICATION
OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
Our Audit Committee has selected Deloitte to be our independent
registered public accounting firm for fiscal 2007. A
representative of Deloitte is expected to be present at the
annual meeting and will have an opportunity to make a statement
if he or she so desires. The representative also will be
available to respond to appropriate questions from the
stockholders.
Although it is not required to do so, the Board of Directors is
submitting the Audit Committees selection of our
independent registered public accounting firm for ratification
by the stockholders at the annual meeting in order to ascertain
the view of the stockholders regarding such selection. The
affirmative vote of the holders of a majority of votes cast on
the proposal at the annual meeting will be required to approve
this proposal.
The Board of Directors recommends a vote FOR
ratification of the selection of Deloitte as our independent
registered public accounting firm for 2007.
RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
Deloitte has served as our independent auditors since
April 24, 2006 and audited our consolidated financial
statements as of December 31, 2006 and April 28, 2006
(Date of Inception) and for the period from April 28, 2006
(Date of Inception) through December 31, 2006.
The following table lists the fees for services rendered by our
independent auditors for 2006:
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Services
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2006
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Audit Fees(1)
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$
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59,000
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Audit-Related Fees(2)
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Tax Fees(3)
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All Other Fees
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Total
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$
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59,000
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(1)
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Audit fees billed in 2006 consisted of the audit of our annual
consolidated financial statements, a review of our quarterly
consolidated financial statements, statutory and regulatory
audits, consents and other services related to our filings with
the SEC.
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(2)
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Audit-related fees consist of financial accounting and reporting
consultations.
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(3)
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Tax services consist of tax compliance and tax planning and
advice.
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The Audit Committee pre-approves all auditing services and
permitted non-audit services (including the fees and terms
thereof) to be performed for us by our independent auditor,
subject to the de minims exceptions for non-audit services
described in Section 10A(i)(1)(B) of the Exchange Act and
the rules and regulations of the SEC. The Audit Committee has
approved Deloitte to perform the following non-audit services
for us during 2007:
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consultations and consents related to SEC filings and
registration statements;
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consultation of accounting matters; and
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tax planning and tax compliance for the U.S. income and
other taxes.
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Auditor
Independence
The Audit Committee has considered whether the provision of the
above noted services is compatible with maintaining the
independence of our independent registered public accounting
firms independence and has concluded that the provision of
such services has not adversely affected the independent
registered public accounting firms independence.
AUDIT COMMITTEE REPORT TO STOCKHOLDERS
The Audit Committee of the Board of Directors operates under a
written charter adopted by the Board of Directors. The role of
the Audit Committee is to oversee our financial reporting
process on behalf of the Board of Directors. Our management has
the primary responsibility for our financial statements as well
as our financial reporting process, principles and internal
controls. The independent registered public accounting firm is
responsible for performing an audit of our financial statements
and expressing an opinion as to the conformity of such financial
statements with accounting principles generally accepted in the
United States of America.
In this context, the Audit Committee has reviewed and discussed
our audited financial statements as of and for the year ended
December 31, 2006 with management and the independent
registered public accounting firm. The Audit Committee has
discussed with the independent registered public accounting firm
the matters required to be discussed by the statement on
Auditing Standards No. 61, as amended (Professional
Standards), as currently in effect. In addition, the Audit
Committee has received the written disclosures and the letter
from the independent registered public accounting firm required
by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), as
currently in effect, and it has discussed their independence
with us. The Audit Committee has also considered whether the
independent registered public accounting firms provision
of tax preparation, tax consulting services and other non-audit
services to us is compatible with maintaining the independent
registered public accounting firms independence.
Based on the reports and discussions described above, the Audit
Committee recommended to the Board of Directors that the audited
financial statements be included in our Annual Report on
Form 10-K
for the year ended December 31, 2006, which has been filed
with the SEC.
Audit Committee:
Maurice J. DeWald, Chairman
W. Bradley Blair, II
Warren D. Fix
Gary T. Wescombe
Our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006 is being mailed
to stockholders on or about April 25, 2007. Our Annual
Report on
Form 10-K
is not incorporated in this proxy statement and is not deemed a
part of the proxy soliciting material.
CODE OF BUSINESS CONDUCT AND ETHICS
We have adopted a Code of Business Conduct and Ethics, or the
Code of Ethics, which contains general guidelines for conducting
our business and is designed to help directors, employees and
independent consultants resolve ethical issues in an
increasingly complex business environment. The Code of Ethics
applies to our Principal Executive Officer, Principal Financial
Officer, Principal Accounting Officer, Controller and persons
performing similar functions and all members of our Board of
Directors. The Code of Ethics covers topics including, but not
limited to, conflicts of interest, confidentiality of
information and compliance with laws and regulations.
Stockholders may request a copy of the Code of Ethics, which
will be provided without charge, by writing to: NNN
Healthcare/Office REIT, Inc., 1551 N. Tustin Avenue,
Suite 200, Santa Ana, California 92705, Attention:
Secretary.
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PROPOSALS FOR 2008 ANNUAL MEETING
Under SEC regulations, any stockholder desiring to make a
proposal to be acted upon at the 2008 annual meeting of
stockholders must cause such proposal to be received at our
principal executive offices located at 1551 N. Tustin
Avenue, Suite 200, Santa Ana, California 92705, Attention:
Secretary, no later than February 13, 2008, in order for
the proposal to be considered for inclusion in our proxy
statement for that meeting. Stockholders also must follow the
procedures prescribed in SEC
Rule 14a-8
promulgated under the Securities Exchange Act of 1934. We
presently anticipate holding the 2008 annual meeting of
stockholders in June 2008.
Mailing
of Materials; Other Business
We will mail a proxy card together with this proxy statement to
all stockholders of record at the close of business on
April 25, 2007. The only business to come before the annual
meeting of which management is aware is set forth in this proxy
statement. If any other business does properly come before the
annual meeting or any postponement or adjournment thereof, the
proxy holders will vote in regard thereto according to their
discretion insofar as such proxies are not limited to the
contrary.
It is important that proxies be returned promptly. Therefore,
stockholders are urged to date, sign and return the accompanying
proxy card in the enclosed envelope or by fax to
(212) 645-8046
or by telephone by dialing toll-free 1-866-888-4067 or by the
Internet at https://www.proxyvotenow.com/heal.
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PROXY
Please Vote by June 11, 2007
The undersigned stockholder of NNN Healthcare/Office REIT, Inc., a Maryland corporation, hereby
appoints Scott D. Peters and Andrea R. Biller and each of them as proxies for the undersigned with
full power of substitution in each of them, to attend the Annual Meeting of our Stockholders to be
held at the Irvine Marriott, 18000 Von Karman Avenue, Irvine, California 92612, on June 12, 2007 at
12:00 p.m. local time and any and all adjournments and postponements thereof, to cast, on behalf of
the undersigned, all votes that the undersigned is entitled to cast, and otherwise to represent the
undersigned, at such meeting and all adjournments and postponements thereof, with all power
possessed by the undersigned as if personally present and to vote in their discretion on such other
matters as may properly come before the meeting. The undersigned hereby acknowledges receipt of the
Notice of the Annual Meeting of Stockholders and of the accompanying proxy statement, which is
hereby incorporated by reference, and revokes any proxy heretofore given with respect to such
meeting.
This proxy is solicited on behalf of the NNN Healthcare/Office REIT, Inc. Board of Directors. In
their discretion, the proxies are authorized to vote upon such other business as may properly come
before the annual meeting, including matters incident to its conduct.
When properly executed, this proxy will be voted as specified by the undersigned stockholder. If no
voting instruction is given as to any item, this proxy will be voted FOR the nominees named in
Item 1 and FOR Item 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES NAMED IN ITEM NO. 1 AND FOR ITEM NO.
2. IF NO SPECIFICATION IS MADE, SUCH PROXY WILL BE VOTED FOR SUCH ITEM.
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For the election of Scott D. Peters, W. Bradley Blair, II, Maurice J. DeWald, Warren D. Fix,
Larry L. Mathis and Gary T. Wescombe to serve as Directors until the Annual Meeting of
Stockholders of NNN Healthcare/Office REIT to be held in the year 2008 and until their
successors are elected and qualified. |
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o
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For All Nominees
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Withheld as to All Nominees
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For All Nominees Except* |
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Scott D. Peters
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W. Bradley Blair, II
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Maurice J. DeWald |
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Warren D. Fix
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Larry L. Mathis
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Gary T. Wescombe |
*To vote against any individual nominee, strike a line through the nominees name
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For ratification of the appointment of Deloitte & Touche LLP as our Independent Registered
Public Accounting Firm for the fiscal year 2007. |
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o For
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o Against
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o Abstain |
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SIGN, DATE and RETURN: |
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Date:
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/2007 |
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If the stock is jointly
owned, both parties
must sign. |
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Date:
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/2007 |
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YOUR VOTE IS IMPORTANT!
You can authorize the proxies to cast your vote and otherwise
represent you at the annual meeting in one of four ways:
MAIL: Return the completed form in the enclosed postage-paid envelope.
FAX: Fax the completed form to (212) 645-8046.
PHONE: Call our toll-free number at (866) 888-4067 to vote.
INTERNET: Vote online at https://www.proxyvotenow.com/heal.