Senior Housing Finance Activity: Grandbridge, Cushman & Wakefield, LTC Properties

| August 15, 2013

LTC Enters $141 Million Mortgage Loan Agreement with Prestige

LTC Properties, Inc. (NYSE:LTC) announced recently it has entered a $141 million mortgage loan agreement with affiliates of Prestige Healthcare, secured by 15 properties with a total of 2,092 licensed skilled nursing beds and 24 independent living units in Michigan.

The loan has a 30-year term with an initial 9.41% interest rate for five years, after which it will escalate annually by 2.25%. Payments will be interest-only for three years; the borrower will then make interest payments along with annual principal payments of $1 million.

LTC expects to fund about $126 million of the loan during the fourth quarter of 2013, with additional forward commitments of $12 million for capital improvements and up to $3 million for short-term working capital. The mortgage loan agreement also provides (under certain conditions and based on operating metrics and valuation thresholds achieved and sustained within the first 12 years of the term) for additional loan proceeds of up to $40 million, limited to $10 million a year.

Louisville, Ky.-based Prestige Healthcare will have a one-time option between the third and twelfth years to prepay up to 50% of the outstanding loan balance without penalty. Because of this option, LTC separated the properties collateralizing the loan into two pools of assets. If Prestige exercises the option, LTC will identify which of the two pools it will release for prepayment and removal from the portfolio of properties securing the loan.

If the prepayment option is exercised and concluded in a timely manner, then Prestige will forgo its opportunity to access any additional loan proceeds.

Under certain circumstances—such as a change in the regulatory environment—LTC has an option to purchase the properties.

“LTC is very pleased to announce this transaction expanding our existing relationship with Prestige Healthcare, further diversifying our operator base, enhancing our geographic diversification and increasing our presence in the top 31 Metropolitan Statistical Areas,” said Wendy Simpson, president and CEO of LTC. “Furthermore, this off-market transaction demonstrates the success of our relationship oriented marketing strategy and our strategy to invest in newer or newly renovated skilled nursing assets or properties with expansion and/or renovation potential. Although structured as a long term mortgage loan to meet the needs of our customer, this transaction embodies most elements of a long term master lease.”

Ziegler Closes $94 Million Financing for Mass. Senior Community

Ziegler recently announced the closing of the $93,625,000 unrated, fixed-rate Series 2013 Bonds for North Hill Communities, Inc., the not-for-profit parent corporation to North Hill Needham, Inc., North Hill Home Health Care, Inc., and True North Development LLC.

North Hill Needham, Inc. is a senior living campus near Wellesley in Massachusetts comprised of 285 independent living units, 72 skilled nursing beds, and common and administrative areas.

The Series 2013 Bonds, along with an equity contribution from North Hill, are being issued for the renovation, expansion, and equipping of existing independent living apartments and common areas, including existing and new dinging venues, a wellness center, and a conference suite; the renovation and equipping of a new enhanced independent living and maintenance facility, a connector facility, and various additions to common areas; and the construction and equipping of an approximately 71,930-square-foot new skilled nursing facility.

Bond proceeds will also be used for site improvements related to these projects, along with the funding of interest through Dec. 31, 2014, the funding of debt service reserve funds, and the payment of the cost of issuance related to the Series 2013 bonds.

Beech Street Closes $7.6 Million Loan for St. Louis SNF

Beech Street Capital, LLC announced recently the closing of a $7.6 million loan under the HUD Section 232/223(f) refinancing program for Green Valley Nursing & Rehabilitation Center, a 150-bed skilled nursing facility in St. Louis, Mo.

Joshua Rosen, executive vice president of Beech Street Capital, originated the transaction out of the firm’s Chicago office.

The loan for ROMA Healthcare, the facility’s owner, was about to expire and Beech Street was able to negotiate the timing of the closing with HUD to ensure the borrower was able to pay off the loan on time.

American Realty Capital Launches $300 Million Offering

American Realty Capital Properties, a New York-based commercial REIT, recently announced plans to issue $300 million of convertible senior notes in an underwritten public offering.

The notes are due to mature on August 1, 2018 and may be converted into cash, common stock, or a combination of those in limited circumstances, prior to February 1, 2018.

The REIT plans to grant underwriters a 30-day option of purchasing an additional $30 million in notes in the case of over-allotments.

American Realty Capital plans to use the proceeds from the offering to repay outstanding indebtedness under its existing senior secured revolving credit facility, which will then increase the availability of funds under this credit facility. The REIT also gains ability to invest in more properties.

JPMorgan Chase, Citigroup, Barclays, BMO Capital Markets and KeyBanc Capital Markets will act as joint bookrunners for this offering. JMP Securities, Ladenburg Thalmann & Co., and RCS Capital, the investment banking and capital markets division of Realty Capital Securities, will act as co-managers for the senior note offering.

Grandbridge Facilitates Bridge Financing for Ore. Senior Community

Grandbridge’s Seniors Housing Group facilitated the $12,225,000 bridge financing for Morningside Development Group for the recapitalization and minor renovations of Quail Park Memory Care Center in Eugene, Ore.

The non recourse bridge financing was facilitated by Grandbridge through its proprietary lending platform, BB&T Real Estate Funding LLC.

Lancaster Pollard Refinances Ohio CCRC

Lancaster Pollard recently assisted Methodist ElderCare Services in refinancing its existing HUD-insured loan on the skilled nursing and assisted living portions of Wesley Glen, its flagship continuing care retirement community, for $13.1 million.

The campus, located in Columbus, Ohio, has 369 units of independent living, assisted living, memory care, and skilled nursing care.

Lancaster Pollard utilized the FHA Section 232/223(a)(7) loan program on behalf of Wesley Glen and was able to obtain a low interest rate, allowing the not-for-profit organization to benefit from net present value savings of approximately $1.5 million over the life of the loan.

Kass Matt, senior vice president and regional manager at Lancaster Pollard, led the transaction.

Oxford Finance Closes $7.2 Million Financing for SNF Acquisition

Oxford Finance LLC announced recently that it closed a $7.2 million senior secured term loan with Pritok Capital, the proceeds of which were used to acquire Nentwick Care Center, a 100-bed skilled nursing facility in East Liverpool, Ohio.

“Oxford is very pleased to provide capital to Pritok for the acquisition of Nentwick Care Center,” said Christopher A. Herr, managing director for Oxford Finance. “Pritok has a strong investment platform for acquiring high quality seniors housing assets nationally, and we look forward to partnering with them on future transactions.”

Love Funding Closes $7.24 Million Loan for Seattle Senior Care Center

Love Funding recently closed a $7.24 million loan to refinance Sea Mar Community Care Center, a 100-bed skilled nursing facility in Seattle.

Artin Anvar, a senior director out of Love Funding’s Washington, D.C. office secured the loan through the HUD Section 232/223(a)(7) LEAN program, allowing the borrower to lock in a low, fixed-rate, non recourse loan for a 33-year term and generate more than $215,000 in annual debt service savings.

Spectrum Completes $124 Million Financing with Bank of the West

Spectrum Retirement Communities, LLC, a developer, owner, and operator of senior living communities, recently completed a $124 million financing transaction led by Bank of the West as the agent bank.

Spectrum will use the $124 million term loan to refinance existing debt and buy out an equity partner for a six-property senior housing portfolio. Communiites are located in Kansas, Missouri, Illinois, and Arizona.

Bank of the West acted as administrative agent and lead arranger for the syndicated loan. Other lenders in the syndicated loan were Compass Bank, Colorado Business Bank, and Raymond James Bank, N.A.

Cushman & Wakefield Arranges $38.3 Million Financing for LCB

Cushman & Wakefield’s senior housing capital markets group recently arranged the $38.3 million capitalization of LCB Senior Living, LLC’s first two development projects.

For the first project, Cushman arranged the $19.8 million of debt financing and equity investment for the construction and development of The Residence at Riverbend, which will be a 75-unit independent living, assisted living, and memory care community. PNC Bank provided construction financing, with joint venture equity provided by Prudential Real Estate Investors. The project is expected to break ground this summer and be completed in Fall 2014.

Cushman also arranged an $18.5 million construction loan for The Residence at Watertown Square, which will be a 90-unit independent living, assisted living, and memory care community in Watertown, Mass. For this project, LCB is partnering with the New England Carpenter’s Union, a separate account pension fund that is represented by Great Point Investors. PNC provided construction financing for the project, which is underway and expected to open in Fall 2014.

The Cushman & Wakefield team involved in the transaction include Richard Swartz, Phil Anderson, Jay Wagner, Aaron Rosenzweig, and Stuart Kim.

Oak Grove Originates $11 Million Loan for Ore. Senior Housing Property

Oak Grove Capital originated an $11.14 million loan for Canfield Place, an 88-unit property in Beaverton, Ore. The Freddie Mac CME Fixed Rate loan was facilitated by Jeff Ringwald, senior vice president at Oak Grove Capital.

Contemporary Healthcare Capital Provides $5.8 Million Loan for ALZ Community

Contemporary Healthcare Capital, LLC recently provided a $4.5 million senior loan and a $1.25 million mezzanine loan for the financing of a 54-bed memory care community in Green Valley, Ariz.

The borrower will use the proceeds to refinance existing debt, provide working capital, and pay closing costs.


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Category: Finance and Development, REIT, Senior Housing, Stocks

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