Item 1.01 Entry into a Material Definitive Agreement
On November 30, 2016, Global Medical REIT Inc. (the “
Company
”)
announced that it has entered into agreements to acquire three rehabilitation hospitals for an aggregate purchase price of $68,093,000.
The three hospitals, discussed further below, are HealthSouth rehabilitation hospitals in Mesa, AZ, Altoona, PA and Mechanicsburg,
PA.
HealthSouth East Valley Rehabilitation Hospital – Mesa,
AZ
On November 29, 2016, the Company, through a wholly owned subsidiary
of the Company’s operating partnership, Global Medical REIT L.P. (the “
OP
”), entered into a purchase contract
(the “
Mesa PSA
”) with HR ACQUISITION I CORPORATION (the “
Mesa Seller
”) to acquire the land
and buildings known as the HealthSouth East Valley Rehabilitation Hospital (the “
Mesa Property
”) located in
Mesa, AZ from the Mesa Seller for a purchase price of $22,350,000. Serving the residents of Mesa and East Valley, AZ, the hospital
is a 60-bed rehabilitation facility which was opened in 2009 and contains approximately 52,000 square feet.
Upon closing of the acquisition of the Mesa Property, the Company
will assume from the Mesa Seller the existing triple-net lease agreement (the “
Mesa Lease
”) pursuant to which
the Mesa Property is leased to HealthSouth Mesa Rehabilitation Hospital, LLC with a remaining initial lease term of approximately
eight years, subject to four consecutive five-year renewal options by the tenant, which lease is guaranteed by HealthSouth Corporation
(“
HealthSouth
”). The aggregate annual rent for the Mesa Property is currently $1,710,617, subject to 3% annual
rent escalations. HealthSouth Mesa Rehabilitation Hospital, LLC has the option under the Mesa Lease to purchase the Mesa Property
at the end of the initial lease term and at the end of each renewal term thereof, if any, upon the terms and conditions set forth
in the Mesa Lease.
HealthSouth Rehabilitation Hospital
of Altoona – Altoona, PA
On November 29, 2016, the Company,
through a wholly owned subsidiary of the OP, entered into a purchase contract (the “
Altoona PSA
”) with HR ACQUISITION
OF PENNSYLVANIA, INC. (the “
Altoona Seller
”) to acquire the land and building comprising the HealthSouth Rehabilitation
Hospital of Altoona (the “
Altoona Property
”) located in Altoona, PA from the Altoona Seller for a purchase price
of $21,545,000. The 80-bed, approximately 64,000 square-foot inpatient rehabilitation hospital specializes in the treatment and
rehabilitation of amputations, brain injury, neurological disorders, orthopedic conditions, spinal cord injury, and stroke. On-site
services include imaging, pharmacy, dental services, laboratory services, renal dialysis, therapeutic radiology, electrical stimulation
therapy, upper extremity robotics, diagnostic tools for balance disorders, and Visi-Pitch IV.
Upon closing of the acquisition of the Altoona Property, the
Company will assume from the Altoona Seller the existing triple-net lease agreement pursuant to which the Altoona Property is leased
to HealthSouth with a remaining initial lease term of approximately 4.5 years, subject to two consecutive five-year renewal options
by the tenant. The annual rent for the Altoona Property is currently $1,635,773, subject to annual rent escalations based on increases
in the consumer price index, or CPI, but not greater than 4% nor less than 2%.
HealthSouth Rehabilitation Hospital
of Mechanicsburg – Mechanicsburg, PA
On November 29, 2016, the Company, through a wholly owned subsidiary
of the OP, entered into a purchase contract (the “
Mechanicsburg PSA
” and together with the Mesa PSA and the
Altoona PSA, the “
Related Contracts
” and the transactions contemplated thereby, the “
Transactions
”
and each a “
Transaction
”) with HR ACQUISITION OF PENNSYLVANIA, INC. (the “
Mechanicsburg Seller
”)
to (i) acquire the land and building comprising the HealthSouth Rehabilitation Hospital of Mechanicsburg (the “
Mechanicsburg
Property
” and together with the Mesa Property and the Altoona Property, the “
Properties
” and each
a “
Property
”) located in Mechanicsburg, PA from the Mechanicsburg Seller for a purchase price of $24,198,000;
and (ii) accept an assignment of the ground lessee’s interest in the Ground Lease dated May 1, 1996 from the Mechanicsburg
Seller, whereby PENNSYLVANIA HRT, INC. ground leased the Mechanicsburg Property to the Mechanicsburg Seller (the “
Mechanicsburg
Lease
”). The hospital offers specialized inpatient rehabilitation services, including imaging, laboratory services, a
pharmacy, and orthotics to promote rehabilitation from conditions such as joint replacements, stroke, Parkinson’s disease,
spinal cord injuries, and traumatic brain injury. The Mechanicsburg Property covers approximately 80,000 square feet and contains
75 beds along with 2 private and 35 semi-private rooms.
Upon closing of the acquisition of the Mechanicsburg Property,
the Company will assume from the Mechanicsburg Seller the existing triple-net lease agreement pursuant to which the Mechanicsburg
Property is leased to HealthSouth with a remaining initial lease term of approximately 4.5 years, subject to two consecutive five-year
renewal options by the tenant. The annual rent for the Mechanicsburg Property is currently $1,836,886, subject to annual rent escalations
based on increases in the CPI, but not greater than 4% nor less than 2%. HealthSouth Rehabilitation Corporation has the option
under the Mechanicsburg Lease to purchase the Mechanicsburg Property at the end of the initial lease term and at the end of each
renewal term thereof, if any, upon the terms and conditions set forth in the Mechanicsburg Lease.
The Company’s obligation to close each of these
acquisitions is subject to certain conditions. The Company has the right to terminate, without penalty, a Related Contract on
or before December 8, 2016, if, in its sole discretion, it is not satisfied with the results of its ongoing due diligence
investigation of a Property. Upon any such termination, the other Related Contracts will automatically terminate.
Further, each of the Transactions is contingent on the other two, so the Company will not close one without closing the other two. The Company’s due diligence period under each Related Contract expires on
December 8, 2016, at which time the Company’s earnest money deposits become non-refundable. Upon the expiration of the
due diligence period, the Company is obligated to fund an additional deposit under each of the Related Contracts. If the
Company terminates a Related Contract after the expiration of the due diligence period, it will forfeit the initial earnest
money deposit and the additional deposit referenced in the preceding sentence. All deposits will be applied to the purchase
price in each Transaction. The Transactions also are subject to other customary terms and conditions as set forth in
the Related Contracts. Although the Company believes completion of these acquisitions is probable, there is no assurance that
the Company will close them.
The above descriptions of the terms and conditions of the Related
Contracts and the Transactions contemplated thereby is only a summary and is not intended to be a complete description of the terms
and conditions. All of the terms and conditions of the Related Contracts are set forth in the Related Contracts that are filed
as Exhibit 10.1, Exhibit 10.2 and Exhibit 10.3 to this Current Report on Form 8-K and are incorporated herein by reference.