Related Party Transactions | 3 Months Ended |
Mar. 31, 2014 |
Related Party Transactions [Abstract] | ' |
Related Party Transactions | ' |
Related Party Transactions |
Fees and Expenses Paid to Affiliates |
All of our executive officers and our non-independent directors are also executive officers and employees and/or holders of a direct or indirect interest in our advisor, one of our co-sponsors or other affiliated entities. We are affiliated with our advisor and American Healthcare Investors; however, we are not affiliated with Griffin Capital or Griffin Securities. We entered into the Advisory Agreement, which entitles our advisor and its affiliates to specified compensation for certain services, as well as reimbursement of certain expenses, related to our offering. For the three months ended March 31, 2014 and for the period from January 11, 2013 (Date of Inception) through March 31, 2013, our advisor or its affiliates incurred operating expenses on our behalf of $174,000 and $0, respectively. |
Offering Stage |
Other Organizational and Offering Expenses |
Our other organizational and offering expenses are paid by our advisor or its affiliates on our behalf. Our advisor or its affiliates are reimbursed for actual expenses incurred up to 2.0% of the gross offering proceeds from the sale of shares of our common stock in our offering other than shares of our common stock sold pursuant to the DRIP. We did not incur any other organizational and offering expenses for the three months ended March 31, 2014 and for the period from January 11, 2013 (Date of Inception) through March 31, 2013. Other organizational and offering expenses are not recorded in our accompanying condensed consolidated financial statements because such expenses will not become our liability until we have raised the minimum offering, and then only to the extent that other organizational and offering expenses do not exceed 2.0% of the gross offering proceeds from the sale of shares of our common stock in our offering. When recorded by us, such expenses will be charged to stockholder's equity as such amounts will be reimbursed to our advisor or its affiliates from the gross proceeds of our offering. |
Acquisition and Development Stage |
Acquisition Fee |
Our advisor or its affiliates will receive an acquisition fee of up to 2.25% of the contract purchase price, including any contingent or earn-out payments that may be paid, for each property we acquire or 2.0% of the origination or acquisition price, including any contingent or earn-out payments that may be paid, for any real estate-related investment we originate or acquire. The acquisition fee for property acquisitions will be paid as follows: (i) in shares of common stock in an amount equal to 0.25% of the contract purchase price, at $9.00 per share, the price paid to acquire a share of common stock in our offering, net of selling commissions and dealer manager fees, and (ii) the remainder in cash equal to 2.00% of the contract purchase price. Notwithstanding the foregoing, if we are no longer in our offering stage, the 2.25% acquisition fee for property acquisitions shall be paid in cash. Our advisor or its affiliates will be entitled to receive these acquisition fees for properties and real estate-related investments we acquire with funds raised in our offering including acquisitions completed after the termination of the Advisory Agreement, or funded with net proceeds from the sale of a property or real estate-related investment, subject to certain conditions. |
Acquisition fees in connection with the acquisition of properties will be expensed as incurred in accordance with ASC Topic 805, Business Combinations, or ASC Topic 805, and included in acquisition related expenses in our accompanying condensed consolidated statements of operations. Acquisition fees in connection with the acquisition of real estate-related investments will be capitalized as part of the associated investment in our accompanying condensed consolidated balance sheets. |
For the three months ended March 31, 2014 and for the period from January 11, 2013 (Date of Inception) through March 31, 2013, we did not incur any acquisition fees to our advisor or its affiliates. |
Development Fee |
Our advisor or its affiliates will receive, in the event our advisor or its affiliates provide development-related services, a development fee in an amount that is usual and customary for comparable services rendered for similar projects in the geographic market where the services are provided; however, we will not pay a development fee to our advisor or its affiliates if our advisor or its affiliates elect to receive an acquisition fee based on the cost of such development. |
For the three months ended March 31, 2014 and for the period from January 11, 2013 (Date of Inception) through March 31, 2013, we did not incur any development fees to our advisor or its affiliates. |
Reimbursement of Acquisition Expenses |
Our advisor or its affiliates will be reimbursed for acquisition expenses related to selecting, evaluating and acquiring assets, which will be reimbursed regardless of whether an asset is acquired. The reimbursement of acquisition expenses, acquisition fees and 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 directors, including a majority of our independent directors, not otherwise interested in the transaction. |
Reimbursements of acquisition expenses will be expensed as incurred in accordance with ASC Topic 805 and included in acquisition related expenses in our accompanying condensed consolidated statements of operations. Reimbursements of acquisition expenses in connection with the acquisition of real estate-related investments will be capitalized as part of the associated investment in our accompanying condensed consolidated balance sheets. |
For the three months ended March 31, 2014 and for the period from January 11, 2013 (Date of Inception) through March 31, 2013, we did not incur any acquisition expenses to our advisor or its affiliates. |
Operational Stage |
Asset Management Fee |
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 0.75% of average invested assets, subject to our stockholders receiving distributions in an amount equal to 5.0% per annum, cumulative, non-compounded, of invested capital. For such purposes, average invested assets means the average of the aggregate book value of our assets invested in real estate properties and real estate-related investments, before deducting depreciation, amortization, bad debt and other similar non-cash reserves, computed by taking the average of such values at the end of each month during the period of calculation; and average invested capital means, for a specified period, the aggregate issue price of shares of our common stock purchased by our stockholders, reduced by distributions of net sales proceeds by us to our stockholders and by any amounts paid by us to repurchase shares of our common stock pursuant to our share repurchase plan. |
For the three months ended March 31, 2014 and for the period from January 11, 2013 (Date of Inception) through March 31, 2013, we did not incur any asset management fees to our advisor or its affiliates. When incurred by us, asset management fees will be included in general and administrative in our accompanying condensed consolidated statements of operations. |
Property Management Fee |
Our advisor or its affiliates may directly serve as property manager of our properties or may sub-contract its property management duties to any third-party and provide oversight of such third party property manager. Our advisor or its affiliates will be paid a monthly management fee equal to a percentage of the gross monthly cash receipts of such property as follows: (i) a 1.0% property management oversight fee for any stand-alone, single-tenant net leased property, (ii) a 1.5% property management oversight fee for any property that is not stand-alone, single-tenant net leased and for which our advisor or its affiliates will provide oversight of a third party that performs the duties of a property manager with respect to such property, or (iii) a fair and reasonable property management fee that is approved by a majority of our directors, including a majority of our independent directors, that is not less favorable to us than terms available from unaffiliated third parties for any property that is not a stand-alone, single tenant net leased property and for which our advisor or its affiliates will directly serve as the property manager without sub-contracting such duties to a third party. |
For the three months ended March 31, 2014 and for the period from January 11, 2013 (Date of Inception) through March 31, 2013, we did not incur any property management fees to our advisor or its affiliates. When incurred by us, property management fees will be included in rental expenses in our accompanying condensed consolidated statements of operations. |
Lease Fees |
We may pay our advisor or its affiliates a separate fee for any leasing activities in an amount not to exceed the fee customarily charged in arm's-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. Such fee is generally expected to range from 3.0% to 6.0% of the gross revenues generated during the initial term of the lease. For the three months ended March 31, 2014 and for the period from January 11, 2013 (Date of Inception) through March 31, 2013, we did not incur any lease fees to our advisor or its affiliates. |
When incurred by us, lease fees will be capitalized as lease commissions and included in other assets, net in our accompanying condensed consolidated balance sheets. |
Construction Management Fee |
In the event that our advisor or its affiliates assist with planning and coordinating the construction of any capital or tenant improvements, our advisor or its affiliates will be paid a construction management fee of up to 5.0% of the cost of such improvements. For the three months ended March 31, 2014 and for the period from January 11, 2013 (Date of Inception) through March 31, 2013, we did not incur any construction management fees to our advisor or its affiliates. |
When incurred by us, construction management fees will be capitalized as part of the associated asset and included in real estate investments, net in our accompanying condensed consolidated balance sheets or will be expensed and included in our accompanying condensed consolidated statements of operations, as applicable. |
Operating Expenses |
We will reimburse our advisor or its affiliates for operating expenses incurred in rendering services to us, subject to certain limitations. However, we cannot reimburse our advisor or its affiliates at the end of any fiscal quarter for total operating expenses that, in the four consecutive fiscal quarters then ended, exceed the greater of: (i) 2.0% of our average invested assets, as defined in the Advisory Agreement, or (ii) 25.0% of our net income, as defined in the Advisory Agreement, beginning with the four consecutive fiscal quarters ending June 30, 2014, unless our independent directors determined that such excess expenses were justified based on unusual and nonrecurring factors which they deem sufficient. |
For the three months ended March 31, 2014 and for the period from January 11, 2013 (Date of Inception) through March 31, 2013, our advisor or its affiliates incurred operating expenses on our behalf of $174,000. Operating expenses are generally included in general and administrative in our accompanying condensed consolidated statements of operations. |
Compensation for Additional Services |
Our advisor and its affiliates will be paid for services performed for us other than those required to be rendered by our advisor or its affiliates under the Advisory Agreement. The rate of compensation for these services has to be approved by a majority of our board of directors, including a majority of our independent directors, and cannot exceed an amount that would be paid to unaffiliated parties for similar services. For the three months ended March 31, 2014 and for the period from January 11, 2013 (Date of Inception) through March 31, 2013, our advisor and its affiliates were not compensated for any additional services. |
Liquidity Stage |
Disposition Fees |
For services relating to the sale of one or more properties, our advisor or its affiliates will be paid a disposition fee up to the lesser of 2.0% 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, including a majority of our independent directors, upon the provision of a substantial amount of the services in the sales effort. The amount of disposition fees paid, when added to the real estate commissions paid to unaffiliated parties, will not exceed the lesser of the customary competitive real estate commission or an amount equal to 6.0% of the contract sales price. For the three months ended March 31, 2014 and for the period from January 11, 2013 (Date of Inception) through March 31, 2013, we did not incur any disposition fees to our advisor or its affiliates. |
Subordinated Participation Interest |
Subordinated Distribution of Net Sales Proceeds |
In the event of liquidation, our advisor will be paid a subordinated distribution of net sales proceeds. The distribution will be equal to 15.0% of the remaining net proceeds from the sales of properties, after distributions to our stockholders, in the aggregate, of (i) a full return of capital raised from stockholders (less amounts paid to repurchase shares of our common stock pursuant to our share repurchase plan) plus (ii) an annual 7.0% cumulative, non-compounded return on the gross proceeds from the sale of shares of our common stock, as adjusted for distributions of net sales proceeds. Actual amounts to be received depend on the sale prices of properties upon liquidation. For the three months ended March 31, 2014 and for the period from January 11, 2013 (Date of Inception) through March 31, 2013, we did not incur any such distributions to our advisor. |
Subordinated Distribution Upon Listing |
Upon the listing of shares of our common stock on a national securities exchange, in redemption of our advisor's limited partnership units, our advisor will be paid a distribution equal to 15.0% of the amount by which (i) the market value of our outstanding common stock at listing plus distributions paid prior to listing exceeds (ii) the sum of the total amount of capital raised from stockholders (less amounts paid to repurchase shares of our common stock 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 7.0% cumulative, non-compounded return on the gross proceeds from the sale of shares of our common stock through the date of listing. Actual amounts to be received depend upon the market value of our outstanding stock at the time of listing, among other factors. For the three months ended March 31, 2014 and for the period from January 11, 2013 (Date of Inception) through March 31, 2013, we did not incur any such distributions to our advisor. |
Subordinated Distribution Upon Termination |
Pursuant to our Agreement of Limited Partnership, as amended by the Amendment to Agreement of Limited Partnership dated April 9, 2013, the Second Amendment to Agreement of Limited Partnership dated June 6, 2013 and the Third Amendment to Agreement of Limited Partnership dated November 8, 2013, upon termination or non-renewal of the advisory agreement, our advisor will also be entitled to a subordinated distribution in redemption of its limited partnership units from our operating partnership equal to 15.0% of the amount, if any, by which (i) the appraised value of our assets on the termination date, less any indebtedness secured by such assets, plus total distributions paid through the termination date, exceeds (ii) the sum of the total amount of capital raised from stockholders (less amounts paid to repurchase shares of our common stock pursuant to our share repurchase plan) and the total amount of cash equal to an annual 7.0% cumulative, non-compounded return on the gross proceeds from the sale of shares of our common stock through the termination date. In addition, our advisor may elect to defer its right to receive a subordinated distribution upon termination until either a listing or other liquidity event, including a liquidation, sale of substantially all of our assets or merger in which our stockholders receive in exchange for their shares of our common stock shares of a company that are traded on a national securities exchange. |
As of March 31, 2014, we had not recorded any charges to earnings related to the subordinated distribution upon termination. |
Stock Purchase Plans |
On March 5, 2014, our Chairman of the Board of Directors and Chief Executive Officer, Jeffrey T. Hanson, our President and Chief Operating Officer, Danny Prosky, and our Executive Vice President, General Counsel, Mathieu B. Streiff, each executed stock purchase plans, or the Stock Purchase Plans, whereby they each irrevocably agreed to invest 100% of their net after-tax base salary and cash bonus compensation earned as employees of American Healthcare Investors directly into our company by purchasing shares of our common stock. In addition, on March 5, 2014, our Chief Financial Officer, Shannon K S Johnson, our Senior Vice President of Acquisitions, Stefan K.L. Oh, our Secretary, Cora Lo, and our Vice President of Asset Management, Chris Rooney, each executed similar Stock Purchase Plans whereby they each irrevocably agreed to invest 15.0%, 15.0%, 10.0%, and 15.0%, respectively, of their net after-tax base salary earned as employees of American Healthcare Investors directly into our company by purchasing shares of our common stock. |
Purchases of shares of our common stock pursuant to the Stock Purchase Plans shall commence after the initial release from escrow of the minimum offering amount. Further, the Stock Purchase Plans each will terminate on December 31, 2014 or earlier upon the occurrence of certain events, including an early termination of our offering. The shares of common stock will be purchased at a price of $9.00 per share, reflecting the purchase price of the shares in our offering, exclusive of selling commissions and the dealer manager fee. |
Accounts Payable Due to Affiliates |
As of March 31, 2014, we had $174,000 of general and administrative expenses due to our advisor or its affiliates. We did not incur any accounts payable due to affiliates as of December 31, 2013. |