Senior Housing Finance Activity: KKR, Sentio Healthcare Properties, Cain Brothers, More

KKR to Provide $150 Million of Equity to Sentio Healthcare Properties

Real estate investment trust Sentio Healthcare Properties, Inc. announced the signing of a definitive agreement with an affiliate of global investment firm Kohlberg Kravis Roberts & Co. L.P. (KKR) for a commitment to provide $150 million of convertible preferred equity to Sentio in the next two to three years.

KKR will invest with Sentio’s current shareholders in the RIET, including the existing portfolio. Proceeds of the commitment will be used to fund new acquisitions.

Loan Origination Requests up 22% in 2012 for Cambridge

Cambridge Realty Capital Companies reports loan origination requests processed by the company climbed 22% during 2012 in what was a record-setting year for senior care and healthcare transactions.

The company processed 280 loan requests totaling $4.7 billion last year, compared with 230 loans totaling $3.2 billion in 2011. Activity slowed in December, but fourth quarter totals were still substantially higher than the previous year, rising from 51 requests to 75 in 2012.

Lenders close a relatively small percentage of loan origination requests received, says Cambridge chairman Jeff Davis, but Cambridge tracks this information as an indication of market directions.

“We’re observing soaring interest in the HUD 232 Lean program that funds licensed nursing homes and assisted living communities. With low interest rates and greater product accessibility it’s becoming increasingly obvious to borrowers that now is a good time to rethink their financial needs,” he said.

Grandbridge Seniors Housing Group Facilitates Bridge Financing

Grandbridge’s Seniors Housing team facilitated the bridge financing for Artemis Focus Investments, LLC for the recapitalization and minor renovations of Encore Senior Village in New Lenox, Ill.

The Charlotte, N.C.-based firm obtained non recourse bridge financing through its proprietary lending platform, BB&T Real Estate Funding, LLC.

NorthStar Healthcare Announces Escrow Break

NorthStar Healthcare Income, Inc. announced on Feb. 12 it had satisfied the minimum offering amount in connection with its public offering as a result of its sale of $2 million in shares of its common stock for $9.00 per share to NorthStar Realty Finance Corp. (NYSE:NRF), its sponsor.

NorthStar Healthcare intends to use the proceeds of the offering to originate, acquire and asset manage a diversified portfolio of debt and equity investments in the healthcare real estate sector, with a focus on the mid-acuity senior housing sector such as assisted living, memory care, skilled nursing, and independent living communities that mainly cater to a private-pay census.

Friendship Village Chesterfield Issued $23,470,000 Tax-Exempt Fixed Rate Bonds

Cain Brothers served as sole underwriter in the issuance of Series 2012 bonds for Friendship Village Chesterfield (FVC), which owns and operates a life care continuing care retirement facility in Chesterfield, Mo. The bonds were issued as unenhanced fixed rate bonds and were rated BBB- by Fitch based upon FVC’s underlying credit.

A portion of the bond proceeds were used to fund an expansion project that consisted of 30 new independent living units. At the time of the bond sale, 53% of the new units had been pre-sold. Additionally, bond proceeds were used to fund future capital expenditures and reimburse FVC for refurbishment of its health center last year. The average yield of the bonds was 5.065% for a 30-year maturity.

As part of the engagement, Cain Brothers worked closely with FVC’s board, management company (Life Care Services), and the Project Developer (Life Care Services Development Company) to assist in re-evaluating and modifying its strategic plan, creating a strategic capital plan, refining the development plan, and creating a long-term financing strategy to accomplish future growth initiatives.

Lancaster Pollard Refinances 2 Senior Living Properties in Ohio and Indiana

Columbus, Ohio-based Lancaster Pollard recently refinanced two nonprofit senior living properties in Ohio and Indiana.

The Lutheran Home at Concord Reserve, a 192-bed nonprofit skilled nursing and 43-unit assisted living facility in Westlake, Ohio, used the FHA Section 232/223(f) program to refinance $22 million in outstanding bonds and an associated interest rate swap with FHA/GNMA-insured debt. The refinancing locked in a fixed interest rate below 3% for 35 years, resulting in $1 million in annual debt service savings.

The refinancing was led by Kass Matt, a senior vice president and regional manager at the firm.

Wesley Manor, a continuing care retirement community in Frankfort, Ind., refunded existing debt with a regional bank. The financings included $15.6 million in tax exempt bonds synthetically fixed with an interest rate swap and a $1.2 million variable rate taxable loan. The blended interest rate is under 4%.

Proceeds from the $16.8 million funding were used to pay off outstanding debt, increase debt service reserve by $1.56 million, reimburse $190,000 for past capital expenditures and finance $630,000 for future capital projects.

Steve Kennedy, a senior vice president and regional manager at the firm, was the lead banker on the transaction.