Item 1.01 Entry into a Material Definitive
Agreement.
Central Texas Rehabilitation Clinic –
Austin, Texas
Global Medical REIT, Inc. (the
“
Company
”) entered into a purchase contract, effective July 5, 2017, (the “
Austin Purchase
Agreement
”) with Norvin Austin Rehab LLC, a Delaware limited liability company and an affiliate of Norvin
Healthcare Properties (the “
Austin Seller
”), to acquire (i) a 59,258 square-foot, inpatient rehabilitation
facility in Austin, Texas (the “
Rehab Center
”) and (ii) approximately 1.27 acres of land that has been
planned to accommodate the development of a 40-bed, long-term acute care hospital (together with the Rehab Center, the
“
Austin Facility
”), and the tenant shall have the right during the initial lease term to cause the
landlord to develop such land, at the landlord’s sole cost and expense, so long as both the landlord and tenant agree
to a development plan and the lease terms that will govern the tenant’s occupancy of such development upon its completion. The
aggregate purchase price of the Austin Facility is $40,650,000.
The Austin Seller currently leases the
Austin Facility to CTRH, LLC, which is a joint venture between subsidiaries of Kindred Healthcare and Seton
Healthcare, which is part of the Ascension Health System, pursuant to an absolute triple-net lease agreement (the
“
Austin Facility Lease
”) with a remaining lease term of approximately 9.8 years, subject to four five-year
renewal options by the tenant. Initial annual rent will be approximately $2.9 million, subject to annual increases of
approximately 3.0%. Currently, 80% of the lease payments are guaranteed by Kindred Healthcare. The Austin Facility Lease also
contains a right of first offer, which, upon notification of the landlord’s intent to sell the Austin Facility, allows
the tenant to submit an offer to purchase the Austin Facility from the landlord on the landlord’s proposed terms and a right of first refusal, which, upon receipt of an offer
from a third party to purchase the Austin Facility, allows the tenant to purchase the Austin Facility from the landlord on
the same terms. Upon the closing of the acquisition of the Austin Facility, the Company intends, through a wholly-owned
subsidiary of the Company’s operating partnership, Global Medical REIT L.P. (the “
OP
”), to assume
the Austin Facility Lease.
The Company’s obligation to close
the acquisition is subject to certain conditions. The Company has the right to terminate, without penalty, the Austin
Purchase Agreement on or before August 14, 2017, if, in its sole discretion, it is not satisfied with the results of its
ongoing due diligence investigation. If the Company does not terminate the contract by August 14, 2017, the Company’s
earnest money deposit in the amount of $300,000 becomes non-refundable, and the Company must deposit an additional earnest
money deposit in the amount of $300,000, for a total of $600,000 in earnest money funds, which will then be non-refundable
except in the event of an Austin Seller default or failure of a condition to closing. The Austin Purchase Agreement is also
subject to other customary terms and conditions as set forth in the Austin 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 Austin Purchase Agreement 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 Austin Purchase Agreement are set forth in Exhibit 10.1
to this Current Report on Form 8-K, which is incorporated herein by reference.
Carrus Specialty Hospital and Carrus Rehabilitation
Hospital – Sherman, Texas
On June 30, 2017, the Company, through a wholly
owned subsidiary of the OP, closed on the acquisition of the buildings and land known as the Carrus Specialty Hospital and the
Carrus Rehabilitation Hospital (collectively, the “
Carrus Facility
”) located in Sherman, Texas for an aggregate
purchase price of $26,000,000. The Company previously reported on a Current Report on Form 8-K filed with the United States Securities
and Exchange Commission (the “
Commission
”) on May 23, 2017 that it had entered into a purchase contract (the
“
Carrus Purchase Agreement
”) with SDB Partners, LLC (the “
Carrus Seller
”) to acquire the
Carrus Facility.
Upon the closing of the acquisition of the
Carrus Facility, the Company, through a wholly-owned subsidiary of the OP, entered into a new absolute triple-net lease agreement
(the “
Carrus Lease
”), pursuant to which the subsidiary, as landlord, is leasing the Carrus Facility to the
Carrus Seller, as tenant. The Carrus Seller has entered into two separate subleases with Texoma Hospital Partners, LLC (“
THP
”)
and Carrus Rehabilitation Hospital, LLC (“
Carrus Rehab
”). The Carrus Lease has a 20-year term, subject to two
consecutive 10-year renewal options by the tenant. Initial rent equals the product of (i) 8.8% and (B) the sum of the of the aggregate
purchase price plus capitalized closing expenses, subject to annual rent escalations of 2.5%, beginning after the second year
of the lease term. Carrus Healthcare, LLC, a Texas limited liability company, THP and Carrus Rehab are serving as guarantors of
the Carrus Lease on a joint and several basis.
The above description of the terms and conditions
of the Carrus Purchase Agreement and Carrus Lease and the transactions contemplated thereby is only a summary and is not intended
to be a complete description of their terms and conditions. All of the terms and conditions of the purchase contract and lease
are set forth in the Carrus Purchase Agreement, previously filed as Exhibit 10.1 to the Company’s Current Report on Form
8-K filed with the Commission on May 23, 2017 and the Carrus Lease that is filed as Exhibit 10.2 to this Current Report on Form
8-K, respectively, and are incorporated herein by reference.