Item 1.01 Entry into a Material Definitive Agreement
On February 1, 2017, Global Medical REIT Inc. (the
“
Company
”) announced that it has entered into an agreement to acquire a portfolio of three properties for
an aggregate purchase price of $49,500,000. The three properties, discussed further below, are OCOM Hospital, OCOM Physical
Therapy and OCOM North Ambulatory Surgical Center located in Oklahoma City, Oklahoma.
OCOM Hospital, OCOM Physical Therapy and OCOM North Ambulatory
Surgical Center – Oklahoma City, Oklahoma
On January 30, 2017, 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 “Purchase Agreement”) with CRUSE-TWO, L.L.C., an Oklahoma limited liability company (“Cruse-Two”),
and CRUSE-SIX, L.L.C., an Oklahoma limited liability company (“Cruse-Six”) to acquire a 69,811 square-foot surgical
hospital (the “Hospital”), a 20,434 square-foot physical therapy center (the “PT Center,” together with
the Hospital, “OCOM South”), and a 10,086 square-foot outpatient ambulatory surgery center (“OCOM North”)
located in Oklahoma City, Oklahoma from Cruse-Two and Cruse-Six for an aggregate purchase price of $49,500,000.
Upon closing of the acquisition of OCOM South, the Company will
assume the existing absolute triple-net lease agreement (the “OCOM South Lease”), pursuant to which OCOM South is leased
from Cruse-Two to Oklahoma Center for Orthopedic & Multi-Specialty Surgery, LLC (“OCOM”) with a remaining initial
lease term expiring September 1, 2033, subject to three consecutive five-year renewal options by the tenant. 25% of the rent is
guaranteed by United Surgical Partners International, Inc. (“USPI”) and 25% of the rent is guaranteed by INTEGRIS Health,
Inc. (“INTEGRIS”).
Upon closing of the acquisition of OCOM South, the
Company will, through a subsidiary of the OP, enter into a new absolute triple-net lease agreement (the “Master
Lease,”), pursuant to which the subsidiary, as master landlord, will lease OCOM South to Cruse-Two, as master tenant.
The Master Lease will have a five-year term. Initial rent will be $3,138,912, subject to annual rent escalations of 1.4%.
The OCOM South Lease will become a sublease under the Master Lease upon commencement of the Master Lease. USPI and INTEGRIS will
continue to serve as guarantors of the OCOM South Lease in the percentages set forth above, while the Master Lease will have
no lease guarantees. Upon expiration of the Master Lease, the OCOM South Lease will become a direct lease with an annual rent of $3,365,188, subject to annual rent escalations of 2.0% until lease expiration on
September 1, 2033.
Under the Master Lease, OCOM will
continue to be responsible for all lease payments due under the OCOM South Lease, which amounts will be paid directly to the
Master Tenant, while Cruse-Two will be responsible for payment of the additional rent amounts payable under the Master Lease.
Cruse-Two will provide a standby letter of credit (“Letter of Credit”) addressed to the Company as beneficiary in
an amount equal to the aggregate amount of the additional rent payable by Cruse-Two under the Master Lease,
less $220,782, which will be placed into an escrow account at closing and will be disbursed three months before the end of
the Master Lease.
Upon closing of the acquisition of
OCOM North, the Company will assume the existing absolute triple-net lease agreement (the “OCOM North Lease”)
pursuant to which OCOM North is leased from Cruse-Six, as landlord, to OCOM, as tenant, with a remaining initial lease term
expiring on July 31, 2022, subject to two consecutive five (5)-year renewal options by the tenant. The annual rent under the
OCOM North Lease for OCOM North is currently $383,161, subject to annual increases equal to the CPI (never to
decrease and not to exceed 4.0% over the prior year’s rent and not to exceed an overall increase of 2.5% per year, compounded
annually).
The Company’s obligation to close
the acquisition is subject to certain conditions. The Company has the right to terminate, without penalty, the Purchase Agreement
on or before March 10, 2017, if, in its sole discretion, it is not satisfied with the results of its ongoing due diligence investigation,
at which time the Company’s earnest money deposit becomes non-refundable. The Purchase Agreement is also subject to other
customary terms and conditions as set forth in the Purchase Agreement. Although the Company believes completion of this acquisition
is probable, there is no assurance that the Company will close this acquisition.
The above descriptions of the terms and conditions of the Purchase
Agreement, Lease Agreements and the transactions contemplated thereby are only a summary and are not intended to be a complete
description of the terms and conditions. All of the terms and conditions of the Purchase Agreement and the Lease Agreements are
set forth in the Purchase Agreement and Lease Agreements that are filed as Exhibit 10.1, Exhibit 10.2, Exhibit 10.3
and Exhibit 10.4 to this Current Report on Form 8-K and are incorporated herein by reference.