NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
For the
Three Months Ended
March 31, 2016
and
for the Period from
January 23, 2015
(Date of Inception) through
March 31, 2015
The use of the words “we,” “us” or “our” refers to Griffin-American Healthcare REIT IV, Inc. and its subsidiary, Griffin-American Healthcare REIT IV Holdings, LP, except where the context otherwise requires.
1. Organization and Description of Business
Griffin-American Healthcare REIT IV, Inc., a Maryland corporation, was incorporated on
January 23, 2015
and therefore we consider that our date of inception. We were initially capitalized on
February 6, 2015
. We intend to invest in a diversified portfolio of real estate properties, focusing primarily on medical office buildings, hospitals, skilled nursing facilities, senior housing and other healthcare-related facilities. We may also originate and acquire secured loans and real estate-related investments on an infrequent and opportunistic basis. We generally will seek investments that produce current income. We intend to elect to be treated as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, or the Code, for federal income tax purposes beginning with our taxable year ending December 31, 2016, or the first year in which we commence material operations.
We are conducting a best efforts initial public offering, or our offering, in which we are offering to the public a minimum of
$2,000,000
in shares of our common stock, or the minimum offering, and a maximum of
$3,000,000,000
in shares of our common stock in our primary offering at a purchase price of
$10.00
per share and up to
$150,000,000
in shares of our common stock pursuant to our distribution reinvestment plan, or the DRIP, at a purchase price during our offering of
95.0%
of the primary offering price per share, or
$9.50
per share, assuming a
$10.00
per share primary offering price, aggregating up to
$3,150,000,000
, or the maximum offering. We reserve the right to reallocate the shares of our common stock offered between the primary offering and the DRIP, and among classes of stock if we elect to offer additional classes in the future. The conditions of our minimum offering were satisfied on
April 12, 2016
, and we admitted our initial public subscribers as stockholders, excluding shares purchased by residents of Ohio, Washington and Pennsylvania (who are subject to higher offering amounts).
See Note 8, Subsequent Events
— Status of Our Offering, for a further discussion.
We will conduct substantially all of our operations through Griffin-American Healthcare REIT IV Holdings, LP, or our operating partnership. We are externally advised by Griffin-American Healthcare REIT IV Advisor, LLC, or Griffin-American Healthcare REIT IV Advisor, or our advisor, pursuant to an advisory agreement, or the Advisory Agreement, between us and our advisor that has a
one
-year term that expires on February 16, 2017 and is subject to successive
one
-year renewals upon the mutual consent of the parties. Our advisor uses its best efforts, subject to the oversight and review of our board of directors, to, among other things, research, identify, review and make investments in and dispositions of properties and securities on our behalf consistent with our investment policies and objectives. Our advisor performs its duties and responsibilities under the Advisory Agreement as our fiduciary.
Our a
dvisor is
75.0%
owned and managed by American Healthcare Investors, LLC, or American Healthcare Investors, and
25.0%
owned by a wholly owned subsidiary of Griffin Capital Corporation, or Griffin Capital, or collectively, our co-sponsors. Effective March 1, 2015, American Healthcare Investors is
47.1%
owned by AHI Group Holdings, LLC, or AHI Group Holdings,
45.1%
indirectly owned by NorthStar Asset Management Group Inc., or NSAM, and
7.8%
owned by James F. Flaherty III, one of NSAM’s partners. We are not affiliated with Griffin Capital, Griffin Capital Securities, LLC, or Griffin Capital Securities, or our dealer manager, NSAM or Mr. Flaherty; however, we are affiliated with Griffin-American Healthcare REIT IV Advisor, American Healthcare Investors and AHI Group Holdings.
As of
March 31, 2016
, we have neither purchased nor contracted to purchase any investments and our advisor has not identified any real estate or real estate-related investments in which it is probable that we will invest.
2. Summary of Significant Accounting Policies
The summary of significant accounting policies presented below is designed to assist in understanding our condensed consolidated financial statements. Such condensed consolidated financial statements and the accompanying notes thereto are the representations of our management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America, or GAAP, in all material respects, and have been consistently applied in preparing our accompanying condensed consolidated financial statements.
Basis of Presentation
Our accompanying condensed consolidated financial statements include our accounts and those of our operating partnership. Because we are the sole general partner of our operating partnership and have unilateral control over its management and major operating decisions (even if additional limited partners are admitted to our operating partnership), the accounts of our operating partnership are consolidated in our condensed consolidated financial statements in accordance with
GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 810, Consolidation, or ASC Topic 810. All intercompany accounts and transactions are eliminated in consolidation.
We intend to operate in an umbrella partnership REIT structure in which our operating partnership, or wholly owned subsidiaries of our operating partnership, will own substantially all of the properties acquired on our behalf. We are the sole general partner of o
ur operating partnership, and as of
March 31, 2016
and
December 31, 2015
, owned greater than a
99.0%
general partnership interest therein. Our advisor is a limited partner, and as of
March 31, 2016
and
December 31, 2015
, owned less than a
1.0%
noncontrolling limited partnership interest in our operating partnership.
Interim Unaudited Financial Data
Our accompanying condensed consolidated financial statements have been prepared by us in accordance with GAAP in conjunction with the rules and regulations of the United States Securities and Exchange Commission, or the SEC. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, our accompanying condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. Our accompanying condensed consolidated financial statements reflect all adjustments, which are, in our view, of a normal recurring nature and necessary for a fair presentation of our financial position, results of operations and cash flows for the interim period. Interim results of operations are not necessarily indicative of the results to be expected for the full year; such full year results may be less favorable.
In preparing our accompanying condensed consolidated financial statements, management has evaluated subsequent events through the financial statement issuance date. We believe that although the disclosures contained herein are adequate to prevent the information presented from being misleading, our accompanying condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto included in our 2015 Annual Report on Form 10-K, as filed with the SEC on
March 7, 2016
.
Use of Estimates
The preparation of our accompanying condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of our condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are made and evaluated on an on-going basis using information that is currently available as well as various other assumptions believed to be reasonable under the circumstances. Actual results could differ from those estimates, perhaps in material adverse ways, and those estimates could be different under different assumptions or conditions.
Prepaid Expenses
As of
March 31, 2016
, prepaid expenses consist of prepayments of annual directors’ and officers’ liability insurance premiums. Prepaid expenses are amortized over the related contract periods.
Restricted Cash Held in Escrow
Restricted funds held in escrow of
$1,506,000
as of
March 31, 2016
are not included in our assets in our accompanying condensed consolidated balance sheets and consist of funds received in connection with subscription agreements to purchase shares of our common stock in connection with our offering. We were required to raise the minimum offering on or before
February 16, 2017
(
one
year following the commencement of our offering), or the funds raised, including interest, would have been returned to the subscribers. As of
March 31, 2016
, we had not raised the minimum offering. Therefore, as of
March 31, 2016
, the funds were held in an escrow account and would not have been released to or available to us until the minimum offering was raised. The conditions of our minimum offering were satisfied on
April 12, 2016
, and we admitted our initial public subscribers as stockholders, excluding shares purchased by residents of Ohio, Washington and Pennsylvania (who are subject to higher offering amounts).
See Note 8, Subsequent Events
— Status of Our Offering, for a further discussion.
Stock Compensation
We follow ASC Topic 718,
Compensation
—
Stock Compensation
, or ASC Topic 718, to account for our stock compensation pursuant to the 2015 Incentive Plan, or our incentive plan, and the 2015 Independent Directors Compensation Plan.
See Note 5, Equity
— 2015 Incentive Plan and Independent Directors Compensation Plan, and
Note 8, Subsequent Events
— 2015 Incentive Plan and 2015 Independent Directors Compensation Plan, for a further discussion of grants under such plans.
GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
Income Taxes
We have not yet elected to be taxed as a REIT under the Code. We intend to elect to be taxed as a REIT under Sections 856 through 860 of the Code beginning with our taxable year ending December 31, 2016, or the first year in which we commence material operations, and we intend to continue to be taxed as a REIT. To qualify and maintain our qualification as a REIT, we must meet certain organizational and operational requirements, including a requirement to currently distribute at least
90.0%
of our annual ordinary taxable income, excluding net capital gains, to stockholders. As a REIT, we generally will not be subject to federal income tax on taxable income that we distribute to our stockholders.
If we fail to qualify and maintain our qualification as a REIT in any taxable year, we will then be subject to federal income taxes on our taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year during which qualification is lost unless the Internal Revenue Service grants us relief under certain statutory provisions. Such an event could have a material adverse affect on our net income and net cash available for distribution to stockholders. Because of our intention to elect REIT status for our taxable year ending December 31, 2016, we will not benefit from the loss incurred for the
three months ended March 31, 2016
.
We follow ASC Topic 740,
Income Taxes
, to recognize, measure, present and disclose in our accompanying condensed consolidated financial statements uncertain tax positions that we have taken or expect to take on a tax return. As of
March 31, 2016
and
December 31, 2015
, we did not have any tax benefits nor liabilities for uncertain tax positions that we believe should be recognized in our accompanying condensed consolidated financial statements.
Segment Disclosure
ASC Topic 280,
Segment Reporting
, establishes standards for reporting financial and descriptive information about a public entity’s reportable segments. As of
March 31, 2016
, we evaluate operations as
one
segment and do not report segment information as we have not purchased any investments.
Recently Issued Accounting Pronouncements
In May 2014, the FASB issued Accounting Standards Update, or ASU, 2014-09,
Revenue from Contracts with Customers,
or ASU 2014-09, which requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 supersedes most existing revenue recognition guidance, including industry-specific revenue recognition guidance. Further, the application of ASU 2014-09 permits the use of either the full retrospective or cumulative effect transition approach. In July 2015, the FASB issued ASU 2015-14,
Deferral of the Effective Date
, which provided for a one-year deferral of the effective date for ASU 2014-09, which is now effective for interim and annual reporting periods beginning after December 15, 2017. In March 2016, the FASB issued ASU 2016-08,
Revenue from Contracts with Customers
—
Principal versus Agent Considerations,
or ASU 2016-08, which amends the principal-versus-agent implementation guidance and illustrations in ASU 2014-09. ASU 2016-08 addresses how an entity should: (i) identify the unit of accounting for the principal versus agent evaluation; and (ii) apply the control principle to certain types of arrangements. In April 2016, the FASB issued ASU 2016-10,
Revenue from Contracts with Customers
—
Identifying Performance Obligations and Licensing,
or ASU 2016-10, which amends the guidance in ASU 2014-09 on identifying performance obligations and accounting for licenses on intellectual property. We have not yet selected a transition method nor have we determined the impact the adoption of ASU 2014-09, ASU 2016-08 and ASU 2016-10 on January 1, 2018 will have on our consolidated financial statements.
In February 2015, the FASB issued ASU 2015-02,
Amendments to the Consolidation Analysis,
or ASU 2015-02, which amends the consolidation analysis required under ASC Topic 810. Specifically, ASU 2015-02: (i) modifies the evaluation of whether limited partnerships and similar legal entities are variable interest entities; (ii) eliminates the presumption that a general partner should consolidate a limited partnership; and (iii) amends the effect of fee arrangements in the primary beneficiary determination. Further, the application of ASU 2015-02 permits the use of either the full retrospective or modified retrospective adoption approach. ASU 2015-02 is effective for interim and annual reporting periods beginning after December 15, 2015 with early adoption permitted. We adopted ASU 2015-02 on January 1, 2016, which did not have a material impact on our consolidated financial statements.
In April 2015, the FASB issued ASU 2015-03,
Simplifying the Presentation of Debt Issuance Costs,
or ASU 2015-03, which amends the presentation of debt issuance costs in the financial statements to present such costs as a direct deduction from the carrying amount of the related debt liability rather than as an asset. Amortization of such costs is required to be reported as interest expense. In August 2015, the FASB issued ASU 2015-15,
Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements
, which clarified that debt issuance costs associated with line of credit
GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
arrangements may continue to be presented as an asset, regardless of whether there are any outstanding borrowings on the line of credit arrangemen
t. T
he application of ASU 2015-03 requires retrospective adjustment of all prior periods presented. ASU 2015-03 is effective for interim and annual reporting periods beginning after December 15, 2015 with early adoption permitted. We adopted ASU 2015-03 on January 1, 2016, which did not have an impact on our consolidated financial statements.
In September 2015, the FASB issued ASU 2015-16,
Simplifying the Accounting for Measurement-Period Adjustments,
or ASU 2015-16, which eliminates the requirement to restate prior period financial statements for measurement period adjustments in a business combination. The cumulative effect of a measurement period adjustment as a result of a change in the provisional amounts, calculated as if the accounting had been completed as of the acquisition date, is required to be recorded in the reporting period in which the adjustment amount is determined, rather than retrospectively. Further, ASU 2015-16 requires that the acquirer present separately on the face of the income statement, or disclose in the notes, the portion of the amount recorded in the current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 is effective for interim and annual reporting periods beginning after December 15, 2015 and should be applied prospectively to adjustments to provisional amounts that occur after the effective date. Early adoption is permitted for financial statements that have not yet been made available for issuance. We adopted ASU 2015-16 on January 1, 2016, which did not have an impact on our consolidated financial statements.
In January 2016, the FASB issued ASU 2016-01,
Recognition and Measurement of Financial Assets and Financial Liabilities
, or ASU 2016-01, which amends the classification and measurement of financial instruments. ASU 2016-01 revises the accounting related to: (i) the classification and measurement of investments in equity securities; and (ii) the presentation of certain fair value changes for financial liabilities measured at fair value. ASU 2016-01 also amends certain disclosure requirements associated with the fair value of financial instruments. It is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, with respect to only certain of the amendments in ASU 2016-01, for financial statements that have not yet been made available for issuance. ASU 2016-01 requires the application of the amendments by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption, with certain exceptions. We have not yet determined the impact the adoption of ASU 2016-01 on January 1, 2018 will have on our consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02,
Leases
, or ASU 2016-02, which amends the guidance on accounting for leases, including extensive amendments to the disclosure requirements. Under ASU 2016-02, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under ASU 2016-02, lessor accounting is largely unchanged. ASU 2016-02 is effective for fiscal years and interim periods beginning after December 15, 2018. Early adoption is permitted for financial statements that have not yet been made available for issuance. ASU 2016-02 requires a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. We have not yet determined the impact the adoption of ASU 2016-02 on January 1, 2019 will have on our consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09,
Improvements to Employee Share-Based Payment Accounting,
or ASU 2016-09, which simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 requires disclosures about a change in accounting principle under ASC 250,
Accounting Changes and Error Corrections,
in the period of adoption. ASU 2016-09 is effective for fiscal years and interim periods beginning after December 15, 2016. Early adoption is permitted for financial statements that have not yet been made available for issuance. We do not expect the adoption of ASU 2016-09 on January 1, 2017 to have a material impact on our consolidated financial statements.
3. Commitments and Contingencies
Litigation
We are not presently subject to any material litigation nor, to our knowledge, is any material litigation threatened against us, which if determined unfavorably to us, would have a material adverse effect on our consolidated financial position, results of operations or cash flows.
GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
Dealer Manager Fee
Generally, our dealer manager is paid a fee of up to
3.0%
of gross offering proceeds from the sale of shares of our common stock sold pursuant to the primary offering, of which
1.0%
of the gross offering proceeds will be funded by us and the remaining
2.0%
of the gross offering proceeds will be funded by our advisor; however, our advisor intends to recoup the portion of the dealer manager fee it funds through the receipt of the Contingent Advisor Payment, as defined in
Note 6, Related Party Transactions
, upon the closing of acquisitions. No dealer manager fee is payable on shares of our common stock sold pursuant to the DRIP. As of
March 31, 2016
and
December 31, 2015
, our advisor had not incurred any dealer manager fees as we commenced our offering in February 2016 and had not raised the minimum offering as of
March 31, 2016
.
See Note 5, Equity
— Offering Costs — Dealer Manager Fee, and
Note 6, Related Party Transactions
— Offering Stage — Dealer Manager Fee, for a further discussion.
Other Organizational and Offering Expenses
Our other organizational and offering expenses are funded by our advisor and include all expenses (other than selling commissions and the dealer manager fee) to be paid in connection with our offering. We anticipate that our other organizational and offering expenses will not exceed
1.0%
of the gross offering proceeds for shares of our common stock sold pursuant to our primary offering. As of
March 31, 2016
and
December 31, 2015
, our advisor has incurred offering expenses of approximately
$1,977,000
and
$1,606,000
, respectively. These offering expenses are not recorded in our accompanying condensed consolidated balance sheets because such costs were not our liability until we raised the minimum offering.
See Note 8, Subsequent Events
— Status of Our Offering, for a further discussion. Our advisor intends to recoup such offering expenses through the payment by us of the Contingent Advisor Payment upon the closing of acquisitions. When recorded by us, other organizational expenses will be expensed as incurred, and offering expenses will be charged to stockholder’s equity.
See Note 6, Related Party Transactions
— Offering Stage — Other Organizational and Offering Expenses, for a further discussion
.
4. Redeemable Noncontrolling Interest
As of
March 31, 2016
and
December 31, 2015
, we owned greater than a
99.0%
general partnership interest in our operating partnership and our advisor owned less than a
1.0%
limited partnership interest in our operating partnership. The noncontrolling interest of our advisor in our operating partnership that has redemption features outside of our control is accounted for as redeemable noncontrolling interest and is presented outside of permanent equity in our accompanying condensed consolidated balance sheets.
See Note 5, Equity
— Noncontrolling Interest of Limited Partner in Operating Partnership, for a further discussion. In addition,
see Note 6, Related Party Transactions
— Liquidity Stage — Subordinated Participation Interest — Subordinated Distribution Upon Listing and
Note 6, Related Party Transactions
— Subordinated Distribution Upon Termination, for a further discussion of the redemption features of the limited partnership units.
We record the carrying amount of redeemable noncontrolling interest at the greater of: (i) the initial carrying amount, increased or decreased for the noncontrolling interest’s share of net income or loss and distributions; or (ii) the redemption value. The changes in the carrying amount of redeemable noncontrolling interest consisted of the following for the
three months ended March 31, 2016
:
|
|
|
|
|
|
|
|
Amount
|
Balance — December 31, 2015
|
|
$
|
—
|
|
Reclassification from equity
|
|
2,000
|
|
Net loss attributable to redeemable noncontrolling interest
|
|
—
|
|
Balance — March 31, 2016
|
|
$
|
2,000
|
|
5. Equity
Preferred Stock
Our charter authorizes us to issue
200,000,000
shares of our preferred stock, par value
$0.01
per share. As of
March 31, 2016
and
December 31, 2015
, no shares of preferred stock were issued and outstanding.
Common Stock
Our charter authorizes us to issue
1,000,000,000
shares of our common stock, par value
$0.01
per share. We are offering to the public up to
$3,150,000,000
of shares of our common stock, consisting of up to
$3,000,000,000
of shares of our common stock for
$10.00
per share in our primary offering and up to
$150,000,000
of shares of our common stock for
$9.50
per share
GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
pursuant to the DRIP. We reserve the right to reallocate the shares of our common stock offered between the primary offering and the DRIP, and among classes of stock if we elect to offer additional classes in the future.
On February 6, 2015, our advisor acquired
22,222
shares of our common stock for total cash consideration of
$200,000
and was admitted as our initial stockholder. We used the proceeds from the sale of shares of our common stock to our advisor to make an initial capital contribution to our operating partnership. We effected a reverse stock split as of July 23, 2015, whereby every 2.50 shares of our common stock issued and outstanding were combined into one share of our common stock, resulting in our advisor owning
8,889
shares of our common stock following the reverse stock split.
On October 22, 2015, we effected a stock split, whereby every share of our common stock issued and outstanding was split into
2.343749
shares of our common stock, resulting in our advisor owning
20,833
shares of our common stock.
Offering Costs
Selling Commissions
Generally, we will pay our dealer manager selling commissions of up to
3.0%
of the gross offering proceeds from the sale of shares of our common stock pursuant to the primary offering other than shares of our common stock sold pursuant to the DRIP. Our dealer manager may re-allow all or a portion of these fees to participating broker-dealers. Our dealer manager did not receive any selling commissions for the
three months ended March 31, 2016
and for the period from
January 23, 2015
(Date of Inception) through
March 31, 2015
. Selling commissions were not recorded in our accompanying condensed consolidated financial statements because such commissions were not our liability until we raised the minimum offering.
See Note 8, Subsequent Events
— Status of Our Offering, for a further discussion. When recorded by us, selling commissions will be charged to stockholder’s equity as equity is raised pursuant to our offering.
Dealer Manager Fee
Generally, our dealer manager will receive a dealer manager fee of up to
3.0%
of the gross offering proceeds from the sale of shares of our common stock pursuant to the primary offering other than shares of our common stock sold pursuant to the DRIP. Our dealer manager may re-allow all or a portion of these fees to participating broker-dealers. Our dealer manager did not receive dealer manager fees for the
three months ended March 31, 2016
and for the period from
January 23, 2015
(Date of Inception) through
March 31, 2015
. Dealer manager fees were not recorded in our accompanying condensed consolidated financial statements because such dealer manager fees were not our liability until we raised the minimum offering.
See Note 8, Subsequent Events
— Status of Our Offering, for a further discussion. When recorded by us, dealer manager fees will be charged to stockholder’s equity as equity is raised pursuant to our offering.
See Note 3, Commitments and Contingencies
— Dealer Manager Fee, and
Note 6, Related Party Transactions
— Offering Stage — Dealer Manager Fee, for a further discussion.
Common Stock Held in Escrow
As of
March 31, 2016
, in connection with our offering, we had received subscriptions for
$1,506,000
. The conditions of our minimum offering were satisfied on
April 12, 2016
. Having raised the minimum offering, the offering proceeds were released by the escrow agent to us and and we admitted our initial public subscribers as stockholders, excluding shares purchased by residents of Ohio, Washington and Pennsylvania (who are subject to higher offering amounts).
See Note 8, Subsequent Events
— Status of Our Offering, for a further discussion.
Noncontrolling Interest of Limited Partner in Operating Partnership
On
February 6, 2015
, our advisor made an initial capital contribution of
$2,000
to our operating partnership in exchange for
222
partnership units. Following our reverse stock split and the corresponding conversion of the partnership units of our operating partnership, our advisor owned
89
partnership units effective as of July 23, 2015. On October 22, 2015, we effected a stock split, which increased the number of partnership units outstanding to
208
. Upon the effectiveness of the Advisory Agreement on February 16, 2016, Griffin-American Healthcare REIT IV Advisor became our advisor. As our advisor, Griffin-American Healthcare REIT IV Advisor is entitled to redemption rights of its limited partnership units. Therefore, as of February 16, 2016, such limited partnership units no longer meet the criteria for classification within the equity section of our accompanying condensed consolidated balance sheets, and as such, were reclassified outside of permanent equity, as a mezzanine item, in our accompanying condensed consolidated balance sheets.
See Note 4, Redeemable Noncontrolling Interest
, for a further discussion.
GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
Distribution Reinvestment Plan
In February 2016, we adopted the DRIP that allows stockholders to purchase additional shares of our common stock through the reinvestment of distributions at an offering price equal to
95.0%
of the primary offering price of our offering, subject to certain conditions. We have registered and reserved
$150,000,000
in shares of our common stock for sale pursuant to the DRIP in our offering at an offering price of
$9.50
per share. There were no reinvestment of distributions for the
three months ended
March 31, 2016
and for the period from January 23, 2015 (Date of Inception) through
March 31, 2015
.
Share Repurchase Plan
In February 2016, our board of directors approved a share repurchase plan. The share repurchase plan allows for repurchases of shares of our common stock by us when certain criteria are met. Share repurchases will be made at the sole discretion of our board of directors. Subject to the availability of the funds for share repurchases, we will limit the number of shares of our common stock repurchased during any calendar year to
5.0%
of the weighted average number of shares of our common stock outstanding during the prior calendar year; provided, however, that shares subject to a repurchase requested upon the death of a stockholder will not be subject to this cap. Funds for the repurchase of shares of our common stock will come exclusively from the cumulative proceeds we receive from the sale of shares of our common stock pursuant to the DRIP.
All repurchases will be subject to a
one
-year holding period, except for repurchases made in connection with a stockholder’s death or “qualifying disability,” as defined in our share repurchase plan. Further, all share repurchases will be repurchased following a
one
-year holding period at
92.5%
to
100%
of each stockholder’s repurchase amount depending on the period of time their shares have been held. At any time we are engaged in an offering of shares of our common stock, the repurchase amount for shares repurchased under our share repurchase plan will always be equal to or lower than the applicable per share offering price. However, if shares of our common stock are repurchased in connection with a stockholder’s death or qualifying disability, the repurchase price will be no less than
100%
of the price paid to acquire the shares of our common stock from us. Furthermore, our share repurchase plan provides that if there are insufficient funds to honor all repurchase requests, pending requests will be honored among all requests for repurchase in any given repurchase period, as follows: first, pro rata as to repurchases sought upon a stockholder’s death; next, pro rata as to repurchases sought by stockholders with a qualifying disability; and, finally, pro rata as to other repurchase requests. No share repurchases were requested or made for the
three months ended
March 31, 2016
and for the period from January 23, 2015 (Date of Inception) through
March 31, 2015
.
2015 Incentive Plan and Independent Directors Compensation Plan
In February 2016, we adopted our incentive plan, pursuant to which our board of directors or a committee of our independent directors may make grants of options, restricted shares of common stock, stock purchase rights, stock appreciation rights or other awards to our independent directors, employees and consultants. The maximum number of shares of our common stock that may be issued pursuant to our incentive plan is
4,000,000
shares. As of
March 31, 2016
and
December 31, 2015
, we had not granted any awards under our incentive plan. However, pursuant to the 2015 Independent Directors Compensation Plan (a sub-plan of our incentive plan), upon the election of our
three
independent directors to our board of directors on February 12, 2016, or the service inception date, the independent directors each became entitled to
5,000
shares of our restricted common stock, as defined in our incentive plan, upon the initial release from escrow of the minimum offering on April 13, 2016, or the grant date.
See Note 8, Subsequent Events
— 2015 Incentive Plan and Independent Directors Compensation Plan, for a further discussion. On the grant date,
20.0%
of such restricted common stock vested immediately and
20.0%
will vest on each of the first
four
anniversaries of the grant date. Shares of our restricted common stock may not be sold, transferred, exchanged, assigned, pledged, hypothecated or otherwise encumbered. Such restrictions expire upon vesting. Shares of our restricted common stock will have full voting rights and rights to distributions.
From the service inception date to the grant date, we recognized compensation expense related to the shares of our restricted common stock based on the reporting date fair value, which was estimated at
$10.00
per share, the price paid to acquire a share of common stock in our offering. After the grant date, compensation cost related to the shares of our restricted common stock is measured based on the grant date fair value. Stock compensation expense is recognized from the service inception date to the vesting date for each vesting tranche (i.e., on a tranche-by-tranche basis) using the accelerated attribution method.
For the
three months ended March 31, 2016
, we recognized compensation expense of
$32,000
. ASC Topic 718,
Compensation
—
Stock Compensation,
requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. For the
three months ended March 31, 2016
, we did not
GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
assume any forfeitures. Stock compensation expense is included in general and administrative in our accompanying condensed consolidated statements of operations.
As of
March 31, 2016
, there was
$118,000
of total unrecognized compensation expense, net of estimated forfeitures, related to shares of our restricted common stock. As of
March 31, 2016
, this expense is expected to be recognized over a remaining weighted average period of
2.03
years.
6. Related Party Transactions
Fees and Expenses Paid to Affiliates
All of our executive officers and one of 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, American Healthcare Investors and AHI Group Holdings; however, we are not affiliated with Griffin Capital, Griffin Capital Securities, NSAM or Mr. Flaherty. 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, 2016
and for the period from
January 23, 2015
(Date of Inception) through
March 31, 2015
, our advisor or its affiliates incurred operating expenses on our behalf of
$307,000
and
$0
, respectively.
Offering Stage
Dealer Manager Fee
Our advisor will fund dealer manager fees on our behalf in the amount of
2.0%
of the gross offering proceeds from the sale of shares of our common stock sold pursuant to the primary offering; however, our advisor intends to recoup the portion of the dealer manager fee it funds through the receipt of the Contingent Advisor Payment, as described below, as part of our acquisition fees. No dealer manager fee is payable on shares of our common stock sold pursuant to the DRIP. We did not incur any dealer manager fees to our dealer manager for the
three months ended March 31, 2016
and for the period from
January 23, 2015
(Date of Inception) through
March 31, 2015
.
Other Organizational and Offering Expenses
Our advisor will fund all of our organizational and offering expenses; however, our advisor intends to recoup such expenses through the payment by us of the Contingent Advisor Payment, as described below, as part of our acquisition fees. Based on the experience of our co-sponsors and their affiliates, we anticipate that our other organizational and offering expenses will not exceed
1.0%
of the gross offering proceeds for shares of our common stock sold pursuant to the primary offering. No other organizational and offering expenses will be paid with respect to shares of our common stock sold pursuant to the DRIP. We did not incur any other organizational and offering expenses to our advisor or its affiliates for the
three months ended March 31, 2016
and for the period from
January 23, 2015
(Date of Inception) through
March 31, 2015
.
Acquisition and Development Stage
Acquisition Fee
We will pay our advisor or its affiliates an acquisition fee of up to
4.50%
of the contract purchase price, including any contingent or earn-out payments that may be paid, of each property we acquire or, with respect to any real estate-related investment we originate or acquire, up to
4.25%
of the origination or acquisition price, including any contingent or earn-out payments that may be paid. The
4.50%
or
4.25%
acquisition fees consist of a
2.25%
or
2.00%
base acquisition fee, or the base acquisition fee, for real estate and real estate-related acquisitions, respectively, and an additional
2.25%
contingent advisor payment, or the Contingent Advisor Payment. The Contingent Advisor Payment allows our advisor to recoup the portion of the dealer manager fee and other organizational and offering expenses funded by our advisor. Therefore, the amount of the Contingent Advisor Payment paid upon the closing of an acquisition shall not exceed the then outstanding amounts paid by our advisor for dealer manager fees and other organizational and offering expenses at the time of such closing. For these purposes, the amounts paid by our advisor and considered as “outstanding” will be reduced by the amount of the Contingent Advisor Payment previously paid. Notwithstanding the foregoing, the initial
$7,500,000
of amounts paid by our advisor to fund the dealer manager fee and other organizational and offering expenses, or the Contingent Advisor Payment Holdback, shall be retained by us until the later of the termination of our last public offering, or the third anniversary of the commencement date of our initial public offering, at which time such amount shall be paid to our advisor or its affiliates. In connection with any subsequent public offering of shares of our common stock, the Contingent Advisor Payment Holdback may increase, based upon the maximum offering amount in such subsequent public offering and the amount sold in prior offerings. Our advisor or
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
its affiliates will be entitled to receive these acquisition fees for properties and real estate-related investments acquired with funds raised in our offering, including acquisitions completed after the termination of the Advisory Agreement (including imputed leverage of
50.0%
on funds raised in our offering), or funded with net proceeds from the sale of a property or real estate-related investment, subject to certain conditions. Our advisor may waive or defer all or a portion of the acquisition fee at any time and from time to time, in our advisor’s sole discretion.
The base acquisition fee 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. The base acquisition fee 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. The Contingent Advisor Payment will be used to decrease the liability we incur to our advisor in connection with the dealer manager fee and other organizational and offering expenses.
We did not incur any acquisition fees to our advisor or its affiliates for the
three months ended March 31, 2016
and for the period from
January 23, 2015
(Date of Inception) through
March 31, 2015
.
Development Fee
In the event our advisor or its affiliates provide development-related services, we will pay our advisor or its affiliates 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. We did not incur any development fees to our advisor or its affiliates for the
three months ended March 31, 2016
and for the period from
January 23, 2015
(Date of Inception) through
March 31, 2015
.
Reimbursement of Acquisition Expenses
We will reimburse our advisor or its affiliates 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 contract purchase price of the property or real estate-related investment 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. We did not incur any acquisition expenses to our advisor or its affiliates for the
three months ended March 31, 2016
and for the period from
January 23, 2015
(Date of Inception) through
March 31, 2015
.
Operational Stage
Asset Management Fee
We will pay our advisor or its affiliates a monthly fee for services rendered in connection with the management of our assets equal to one-twelfth of
0.80%
of average invested assets. 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.
We did not incur any asset management fees to our advisor or its affiliates for the
three months ended March 31, 2016
and for the period from
January 23, 2015
(Date of Inception) through
March 31, 2015
. 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 provide property management services with respect to our properties or may sub-contract these duties to any third party and provide oversight of such third-party property manager. We will pay our advisor or its affiliates a monthly management fee equal to a percentage of the gross monthly cash receipts of such property as follows: (i)
GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
a
1.0%
property management oversight fee for any stand-alone, single-tenant, net leased property, except for such properties operated utilizing the structure permitted by the REIT Investment Diversification and Empowerment Act of 2007, which is commonly referred to as a “RIDEA” structure (the provisions of the Code authorizing the RIDEA structure were enacted as part of the Housing and Economic Recovery Act of 2008), for which we will pay a property management oversight fee of
1.5%
of the gross monthly cash receipts with respect to such property; (ii) a
1.5%
property management oversight fee for any property that is not a stand-alone, single-tenant, net leased property 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.
We did not incur any property management fees to our advisor or its affiliates for the
three months ended March 31, 2016
and for the period from
January 23, 2015
(Date of Inception) through
March 31, 2015
. When incurred by us, property management fees will be included in property operating 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.
We did not incur any lease fees to our advisor or its affiliates for the
three months ended March 31, 2016
and for the period from
January 23, 2015
(Date of Inception) through
March 31, 2015
. 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, we will pay our advisor or its affiliates a construction management fee of up to
5.0%
of the cost of such improvements. We did not incur any construction management fees to our advisor or its affiliates for the
three months ended March 31, 2016
and for the period from
January 23, 2015
(Date of Inception) through
March 31, 2015
. 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, 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, 2016
and for the period from
January 23, 2015
(Date of Inception) through
March 31, 2015
, our advisor or its affiliates incurred operating expenses on our behalf of
$307,000
and
$0
, respectively. As of
March 31, 2016
, we have not reimbursed our advisor or its affiliates for any operating expenses. Operating expenses are generally included in general and administrative in our accompanying condensed consolidated statements of operations.
Compensation for Additional Services
We pay our advisor and its affiliates 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, 2016
and for the period from
January 23, 2015
(Date of Inception) through
March 31, 2015
, our advisor and its affiliates were not compensated for any additional services.
GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
Liquidity Stage
Disposition Fees
For services relating to the sale of one or more properties, we will pay our advisor or its affiliates 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. We did not incur any disposition fees to our advisor or its affiliates for the
three months ended March 31, 2016
and for the period from
January 23, 2015
(Date of Inception) through
March 31, 2015
.
Subordinated Participation Interest
Subordinated Distribution of Net Sales Proceeds
In the event of liquidation, we will pay our advisor 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
6.0%
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, 2016
and for the period from
January 23, 2015
(Date of Inception) through
March 31, 2015
, we did not pay 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, we will pay our advisor 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
6.0%
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, 2016
and for the period from
January 23, 2015
(Date of Inception) through
March 31, 2015
, we did not pay any such distributions to our advisor.
Subordinated Distribution Upon Termination
Pursuant to the Agreement of Limited Partnership, as amended, of our operating partnership 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) an
d the total amount of cash equal to an annual
6.0%
cumula
tive, 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, 2016
, we had not recorded any charges to earnings related to the subordinated distribution upon termination.
Stock Purchase Plans
On February 29, 2016, our Chairman of the Board of Directors and Chief Executive Officer, Jeffrey T. Hanson, our President, Chief Operating Officer and Interim Chief Financial Officer, Danny Prosky, and our Executive Vice President and 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 February
GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
29, 2016, three Executive Vice Presidents of American Healthcare Investors, including our Executive Vice President of Acquisitions, Stefan K.L. Oh, executed similar Stock Purchase Plans, whereby each individual irrevocably agreed to invest a portion of their net after-tax base salary or a portion of their net after-tax base salary and cash bonus compensation, ranging from
10.0%
to
15.0%
, 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 commenced beginning with the officers’ regularly scheduled payroll payment after the initial release from escrow of the minimum offering on April 13, 2016. The Stock Purchase Plans terminate on December 31, 2016 or earlier upon the occurrence of certain events, unless otherwise renewed or extended. The shares of common stock will be purchased at a price of
$9.60
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, 2016
, we had
$307,000
of general and administrative expenses due to our advisor or its affiliates, primarily for directors’ and officers’ liability insurance premiums. We did
no
t incur any accounts payable due to affiliates as of
December 31, 2015
.
7. Per Share Data
We report earnings (loss) per share pursuant to ASC Topic 260,
Earnings per Share
. Basic earnings (loss) per share for all periods presented are computed by dividing net income (loss) applicable to common stock by the weighted average number of shares of our common stock outstanding during the period. Net income (loss) applicable to common stock is calculated as net income (loss) attributable to controlling interest less distributions allocated to participating securities. For the
three months ended March 31, 2016
and for the period from January 23, 2015 (Date of Inception) through
March 31, 2015
, we did not allocate any distributions to participating securities. Diluted earnings (loss) per share are computed based on the weighted average number of shares of our common stock and all potentially dilutive securities, if any. Redeemable limited partnership units of our operating partnership are participating securities and give rise to potentially dilutive shares of our common stock. As of
March 31, 2016
and
December 31, 2015
, there were
208
units of redeemable limited partnership units of our operating partnership outstanding, but such units were excluded from the computation of diluted earnings per share because such units were anti-dilutive during these periods.
8. Subsequent Events
Status of Our Offering
The conditions of the minimum offering were satisfied on April 12, 2016, and we admitted our initial public subscribers as stockholders (provided, that residents of Ohio, Washington and Pennsylvania will not be admitted as stockholders until we have received and accepted subscriptions aggregating at least
$10,000,000
,
$20,000,000
and
$150,000,000
, respectively). Having raised the minimum offering, the offering proceeds were released by the escrow agent to us on April 13, 2016 and were available for the acquisition of properties and other purposes disclosed in our prospectus dated February 12, 2016, as filed with the SEC.
As of April 29, 2016, we had received and accepted subscriptions in our offering for
323,225
shares of our common stock, or approximately
$3,156,000
, excluding subscriptions from residents in Ohio, Washington and Pennsylvania and shares of our common stock issued pursuant to the DRIP.
Declaration of Distributions
On April 13, 2016, our board of directors authorized a daily distribution to our stockholders of record as of the close of business on each day of the period from May 1, 2016 through June 30, 2016. Our advisor has agreed to waive asset management fees that may otherwise be due to it pursuant to the Advisory Agreement, in order to provide us with additional funds to pay distributions to our stockholders. Our advisor has agreed to waive the asset management fees only until such time as the amount of such waived asset management fees is equal to the amount of distributions payable to our stockholders for the period commencing on May 1, 2016 and ending on the date we acquire our first property or real estate-related investment. Our advisor will not receive any additional securities, shares of our stock, or any other form of consideration or any repayment as a result of the waiver of such asset management fees.
The daily distributions will be calculated based on 365 days in the calendar year and will be equal to
$0.001643836
per share of our common stock. The distributions will be aggregated and paid in cash or shares of our common stock pursuant to
GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
the DRIP monthly in arrears. The distributions declared for each record date in the May 2016 and June 2016 periods will be paid in June 2016 and July 2016, respectively, only from legally available funds.
2015 Incentive Plan and Independent Directors Compensation Plan
Having raised the minimum offering and upon the initial release from escrow, on April 13, 2016 we granted
5,000
shares of our restricted common stock, as defined in our incentive plan, to each of our
three
independent directors in connection with their initial election to our board of directors. On the grant date,
20.0%
of such restricted common stock immediately vested and
20.0%
will vest on each of the first
four
anniversaries of the grant date. Shares of our restricted common stock may not be sold, transferred, exchanged, assigned, pledged, hypothecated or otherwise encumbered. Such restrictions expire upon vesting. Shares of our restricted common stock have full voting rights and rights to distributions.