Sabra Prices 5 Million Shares of Series A Stock
Sabra Health Care REIT, Inc. (Nasdaq:SBRA) announced last Thursday the pricing of an underwritten public offering of 5,000,000 shares, or $125.0 million, of 7.125% Series A Cumulative Redeemable Preferred Stock (the “Series A Preferred Stock”) at a price of $25.00 per share, pursuant to an effective registration statement. The Company granted the underwriters a 30-day option to purchase up to an additional 750,000 shares of its Series A Preferred Stock. The offering of 5,000,000 shares of Series A Preferred Stock is expected to close on March 21, 2013, subject to customary closing conditions.
Sabra estimates that the net proceeds of the offering, after deducting underwriting discounts and other estimated offering expenses, will be approximately $120.0 million, and approximately $138.2 million if the underwriters exercise their option to purchase additional shares of Series A Preferred Stock.
Sabra intends to contribute the net proceeds from this offering to its operating partnership subsidiary, Sabra Health Care Limited Partnership, which will in turn apply the proceeds to repay borrowings outstanding on the REIT’s amended secured revolving credit facility. The remaining proceeds will be used to fund possible future acquisitions or for general corporate purposes.
Jefferies LLC, Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated acted as joint book-running managers for the offering. Raymond James & Associates, Inc. and Stifel, Nicolaus & Company, Incorporated acted as co-managers.
HUD to Resume Processing Skilled Healthcare Group’s $460 Million Loan Application
Skilled Healthcare Group, Inc. (NYSE:SKH) announced on Monday it had received word from the Department of Housing and Urban Development that processing would resume for the company’s pending application for approval of up to $460 million in HUD-insured loans.
Skilled Healthcare Group had previously announced it had received formal portfolio conditional credit approval of up to $460 million in HUD-insured loans secured by up to 78 facilities through HUD’s Section 232 loan financing program.
Then, on Oct. 31, 2012, the California Attorney General’s Bureau of Medi-Cal Fraud & Elder Abuse filed a complaint against Eureka Healthcare and Rehabilitation Center LLC, Skilled Healthcare, LLC and Skilled Healthcare Group, Inc..
HUD then informed SKH that it would not process or underwrite any HUD-insured loans until the BMFEA Action was resolved to HUD’s satisfaction. On Feb. 2013, the parties to the BMFEA Action reached a “satisfactory” settlement, and Skilled Healthcare Group informed HUD of the terms of the resolution.
“While we have not determined the amount of borrowings we will ultimately seek under the HUD insured loan program, and all loan applications will be subject to further review and approval by HUD, we have submitted application fees to begin processing the first $100 million of HUD insured loans,” said Boyd Hendrickson, chairman and CEO of Skilled Healthcare Group. “At this point, with the ordinary processing time required for HUD to review and approve loans, we do not expect that our loan applications would begin to close until at least the second quarter of 2013.”
The company has identified properties for more HUD-insured loan applications up to the maximum value currently permitted under its senior secured credit agreement to bring the total to $250 million, but has not yet submitted the fees associated with that underwriting.
“We expect to evaluate whether to submit the next tranche of loan applications as the first loan applications proceed through the loan underwriting process,” Hendrickson said. “As a reference point, should we proceed with and close $250 million in aggregate HUD insured loans, at current interest rates we would anticipate annual interest expense savings of approximately $10 million per annum.”
Five Star Extends Existing $35 Million Credit Facility to 2016
Five Star Quality Care, Inc. (NYSE:FVE) announced on Monday it has extended the maturity date of its existing $35 million revolving bank credit facility to March 18, 2016. The existing credit facility was scheduled to expire on March 18, 2013.
In addition to extending the expiration date by three years, certain terms of the credit facility were also amended to reflect current market conditions. Interest paid on borrowings under the credit facility was reduced from LIVOR (with a floor of 200 basis points) plus 400 basis points to LIBOR (with no floor) plus 250 basis points.
The credit facility remains secured by FVE’s accounts receivable and related collateral.
Jefferies Finance LLC acts as lender, arranger, administrative agent, and collateral agent for the facility.
Berkadia Originates $16 Million for Two Senior Housing Properties
Berkadia Commercial Mortgage recently originated a total of $16.4 million of financing for two senior housing properties in Ohio and Nebraska.
For the Ohio property, Berkadia closed a total of $12.4 million in Fannie Mae loans to refinance The Woodlands of Hamilton for borrower Capital Senior Living Corporation. Senior vice president Lisa Lautner, a member of Berkadia’s senior housing group, worked with the borrower to originate the 10-year, fixed-rate loan.
Berkadia had provided the original bridge financing for Capital Senior Living to acquire the 77-unit assisted living and Alzheimer’s care community in October 2012. At the time of the acquisition, the property was still leasing up a recently-opened 30-unit addition. Once the addition reached stabilization four months later, Berkadia was able to replace the bridge loans with permanent financing.
Lautner also worked with Capital Senior Living to originate $4 million, 10-year, fixed rate Fannie Mae loan for the $6.6 million acquisition of Marquis Place of Elkhorn, a 44-unit assisted living and memory care community in Elkhorn, Neb.
Oak Grove Originates $42.8 Million in Senior Housing Loans for Minn. Properties
Oak Grove Capital recently originated loans totaling $42.8 million to refinance three senior housing properties in Minnesota.
A total of $36.9 million in loans were originated to refinance a two-property portfolio in Eden Prairie, Minn. One was a $23 million loan using the HUD Section 232/223(a)(7) program to refinance Summit Place Senior Apartments, and the other was a $13.9 million loan through the same HUD program to refinance Summit Place Assisted Living.
A $5.9 million loan was originated also through the HUD Section 232/223(a)(7) program to refinance ElderCare of Bemidji Supplemental in Bemidji, Minn.
Emeritus Closes Secondary Public Offering, $60 Million Debt Reduction
Emeritus Corporation (NYSE: ESC) announced on Monday the closing of its previously announced secondary public offering of 7,973,600 shares of Emeritus Corporation common stock sold by certain selling shareholders, as well as the simultaneous closing of the issuance and sale of an additional 1,196,040 shares of the company’s common stock pursuant to the full exercise of the underwriter’s over-allotment option to purchase additional shares.
The additional shares of Emeritus’s common stock were sold at a price of $27.00 per share, resulting in $31.3 million in proceeds to the company (after giving effect to the underwriter’s discount), to be used for general corporate purposes, which may include repayment of outstanding debt.
Emeritus also announced its intent to prepay $60 million of its outstanding unsecured notes payable, which have an average interest rate of 8.79%. The payments are expected to be made following mandatory notice periods, ranging from 30 to 60 days.