NNN Healthcare/Office REIT, Inc.
Filed Pursuant to Rule 424(b)(3)
Registration
No. 333-133652
NNN
HEALTHCARE/OFFICE REIT, INC.
SUPPLEMENT NO. 9 DATED JUNE 20, 2007
TO THE PROSPECTUS DATED APRIL 23, 2007
This document supplements, and should be read in conjunction
with, our prospectus dated April 23, 2007, as supplemented
by Supplement No. 7 dated May 9, 2007 and Supplement
No. 8 dated May 25, 2007 relating to our offering of
221,052,632 shares of common stock. The purpose of this
Supplement No. 9 is to disclose:
|
|
|
|
|
the status of our initial public offering;
|
|
|
|
new permanent financing for Thunderbird Medical Plaza in
Glendale, Arizona;
|
|
|
|
our recent acquisition of the Triumph Hospital Portfolio in
Houston, Texas;
|
|
|
|
our proposed acquisition of Gwinnett Professional Center in
Lawrenceville, Georgia;
|
|
|
|
our proposed acquisition of Kokomo Medical Office Park in
Kokomo, Indiana; and
|
|
|
|
our proposed acquisition of St. Marys Physician
Center in Long Beach, California.
|
Status of
Our Initial Public Offering
As of June 12, 2007, we had received and accepted
subscriptions in our offering for 9,220,320 shares of
common stock, or approximately $92,098,000, excluding shares
issued pursuant to our distribution reinvestment plan.
Thunderbird
Medical Plaza Permanent Financing
On June 8, 2007, we, through NNN Healthcare/Office REIT
Thunderbird Medical, LLC, entered into a secured loan with
Wachovia Bank, National Association, or Wachovia, as evidenced
by a promissory note in the principal amount of $14,000,000. The
promissory note is secured by the Thunderbird Medical Plaza in
Glendale, Arizona, or the Thunderbird property, and a Deed of
Trust, Security Agreement and Fixture Filing. The loan matures
on June 11, 2017 and bears interest at a rate of 5.67% per
annum. The loan provides for the following payments:
(1) interest-only payments on the eleventh day of each
month, in the amount set forth in Annex 1 of the promissory
note, commencing July 11, 2007 through and including
June 11, 2009; (2) principal and interest payments
equal to $80,990.10 on the eleventh day of each month commencing
on July 11, 2009 through and including May 11, 2017;
and (3) the outstanding principal amount, together with all
accrued but unpaid interest, in full, on June 11, 2017. The
loan also provides for: (1) a default interest rate of
9.67% per annum, or the maximum amount permitted by applicable
law, in an event of default; and (2) late charges in an
amount equal to 3.0% of the amount of any overdue payments, in
addition to any default interest payments. We have guaranteed
performance under the promissory note under an Indemnity and
Guaranty Agreement in favor of Wachovia. The loan documents
contain customary representations, warranties, covenants and
indemnities, as well as provisions for reserves and impounds.
The cash proceeds (net of closing costs and $1,492,000 of lender
required reserves) of approximately $12,600,000 was used to fund
the acquisition of the Triumph Hospital Portfolio, as described
below.
Acquisition
of Triumph Hospital Portfolio
On June 8, 2007, we, through our operating partnership, NNN
Healthcare/Office REIT Holdings, L.P., acquired the Triumph
Hospital Portfolio in suburban Houston, Texas from an
unaffiliated third party for a total purchase price of
$36,500,000, plus closing costs. The Triumph Hospital Portfolio
consists of Triumph Hospital Northwest and Triumph Hospital
Southwest.
Financing
and Fees
Of the total purchase price of $36,500,000, $17,750,000 was
allocated to Triumph Hospital Northwest and $18,750,000 was
allocated to Triumph Hospital Southwest. We financed the
aggregate purchase price of
1
the Triumph Hospital Portfolio using a combination of:
(1) $12,600,000 in net proceeds from a $14,000,000 loan
from Wachovia secured by the Thunderbird property (described
above); (2) an unsecured loan from NNN Realty Advisors,
Inc., or NNN Realty Advisors, our sponsor, in the principal
amount of $4,000,000 (described below); and (3) funds
raised through this offering. An acquisition fee of $1,095,000,
or 3.0% of the aggregate purchase price, was paid to our advisor
and its affiliate.
On June 8, 2007, in connection with our acquisition of the
Triumph Hospital Portfolio, we, through our operating
partnership, entered into an unsecured loan with NNN Realty
Advisors as evidenced by a promissory note in the principal
amount of $4,000,000. The unsecured note matures on
December 8, 2007 and bears interest at a fixed rate of
6.82% per annum. The unsecured note requires monthly
interest-only payments beginning on July 1, 2007 for the
term of the note. The unsecured note also provides for a default
interest rate of 8.82% per annum. Since NNN Realty Advisors is
our sponsor, this loan is deemed a related party loan.
Therefore, the terms of the unsecured loan and the unsecured
note were approved by a majority of our directors, including a
majority of our independent directors, and deemed fair,
competitive and commercially reasonable by our directors.
Description
of the Property
Triumph Hospital Northwest and Triumph Hospital Southwest were
originally built in 1986 and 1989, respectively, and are located
on 12 and eight acres, respectively, in suburban Houston, Texas.
The Triumph Hospital Portfolio contains approximately
151,000 square feet of gross leasable area, which is
currently 100% leased to affiliates of Triumph Healthcare, the
largest provider of long-term acute care in the Houston area and
the third largest provider in the United States. Triumph
Healthcares lease of Triumph Hospital Southwest, which
includes 68,000 square feet of gross leasable area, expires
in December 2012, with two five-year renewal options. Triumph
Healthcares lease of Triumph Hospital Northwest, which
includes 83,000 square feet of gross leasable area, expires
in February 2013, with two five-year renewal options.
Triple Net Properties Realty, Inc. will serve as the property
manager and will provide services and receive certain fees and
expense reimbursements in connection with the operation and
management of the Triumph Hospital Portfolio.
There are at least ten comparable properties located in the same
submarket that might compete with the Triumph Hospital Portfolio.
Management currently has no renovation plans for the property,
and believes that the property is suitable for its intended
purpose and adequately covered by insurance. For federal income
tax purposes, the depreciable basis in the Triumph Hospital
Portfolio will be approximately $40.0 million. We calculate
depreciation for income tax purposes using the straight line
method. We depreciate buildings based upon estimated useful
lives of 39 years. For 2006, Triumph Hospital Northwest
paid real estate taxes of approximately $225,000 at a rate of
3.13%, and Triumph Hospital Southwest paid real estate taxes of
approximately $118,000 at a rate of 2.05%.
The following table shows the average occupancy rate and the
average effective annual rental rate per square foot for the
Triumph Hospital Portfolio for the last five years:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Effective Annual
|
|
Year
|
|
Average Occupancy Rate
|
|
|
Rental Rate per Square Foot
|
|
|
2002
|
|
|
38
|
%
|
|
$
|
6.40
|
|
2003
|
|
|
100
|
%
|
|
$
|
17.14
|
|
2004
|
|
|
100
|
%
|
|
$
|
17.14
|
|
2005
|
|
|
100
|
%
|
|
$
|
17.14
|
|
2006
|
|
|
100
|
%
|
|
$
|
17.14
|
|
2
Proposed
Acquisition of Gwinnett Professional Center
On June 8, 2007, our board of directors approved the
acquisition of Gwinnett Professional Center. Gwinnett
Professional Center is a three-story, multi-tenant, medical
office building located in Lawrenceville, Georgia. The property
was built in 1985 and contains approximately 60,000 square
feet of gross leasable area. The building is currently 73%
leased. The principal businesses and professions occupying the
building are healthcare providers.
We anticipate purchasing Gwinnett Professional Center for a
purchase price of $9,300,000, plus closing costs, from an
unaffiliated third party. We intend to finance the purchase
through a combination of debt financing and funds raised through
this offering. We expect to pay our advisor and its affiliate an
acquisition fee of $279,000, or 3% of the purchase price, in
connection with the acquisition.
We anticipate that the closing will occur in the third quarter
of 2007; however, closing is subject to certain agreed up
conditions and there can be no assurance that we will be able to
complete the acquisition of Gwinnett Professional Center.
Proposed
Acquisition of Kokomo Medical Office Park
On June 8, 2007, our board of directors approved the
acquisition of Kokomo Medical Office Park. Kokomo Medical Office
Park is comprised of four one-story, multi-tenant, medical
office buildings located in Kokomo, Indiana. The buildings were
constructed from 1992 through 1995 and contain approximately
87,000 square feet of gross leasable area. The buildings
are currently 98% leased. The principal businesses and
professions occupying the buildings are healthcare providers.
We anticipate purchasing Kokomo Medical Office Park for a
purchase price of $13,350,000, plus closing costs, from an
unaffiliated third party. We intend to finance the purchase
through a combination of debt financing and funds raised through
this offering. We expect to pay our advisor and its affiliate an
acquisition fee of $401,000, or 3% of the purchase price, in
connection with the acquisition.
We anticipate that the closing will occur in the third quarter
of 2007; however, closing will be subject to certain conditions
and there can be no assurance that we will be able to complete
the acquisition of Kokomo Medical Office Park.
Proposed
Acquisition of St. Marys Physician Center
On June 8, 2007, our board of directors approved the
acquisition of St. Marys Physician Center.
St. Marys Physician Center consists of a four-story,
multi-tenant, medical office building located in Long Beach,
California. The property was built in 1992 and contains
approximately 67,000 square feet of gross leasable area.
The building is currently 82% leased. The principal businesses
and professions occupying the building are healthcare providers.
We anticipate purchasing St. Marys Physician Center
for a purchase price of $13,800,000, plus closing costs, from an
unaffiliated third party. We intend to finance the purchase
through a combination of debt financing and funds raised through
this offering. We expect to pay our advisor and its affiliate an
acquisition fee of $414,000, or 3% of the purchase price, in
connection with the acquisition.
We anticipate that the closing will occur in the third quarter
of 2007; however, closing is subject to certain agreed up
conditions and there can be no assurance that we will be able to
complete the acquisition of St. Marys Physician
Center.
3