Senior Housing Finance Activity: Ventas, Lancaster Pollard, & More (6/14/2012)

Ventas Selling 5.2 Million Shares to Citigroup to Build Working Capital

Healthcare real estate investment trust Ventas Inc. (NYSE:VTR) said on Thursday it had agreed to sell 5.2 million shares to Citigroup (NYSE:C), with plans to use the proceeds to repay debt and build working capital. 

When the market closed on Thursday, the REIT’s shares were at $58.82, up 6.7% so far this year. 

Everest Provides $12 Million Loan for Minn. Senior Housing Facility

Everest Real Estate Advisors recently secured a $12 million loan for a 90-bed senior housing facility located in Coon Rapids, Minnesota. Gina Dingman, president of Everest, arranged the financing for Select Senior Living. The loan was based on a 3.25%, 35-year term with a 35-year amortization schedule, using HUD’s Section 232/223(f) program.  

American Healthcare Investors Secures $200 Million Credit Facility for REIT

American Healthcare Investors and Griffin Capital Corporation, the co-sponsors of real estate investment trust Griffin-American Healthcare REIT II, announced on Wednesday that the REIT had entered into a $200 million unsecured revolving line of credit with Merrill Lynch, Pierce, Fenner & Smith Incorporated, and KeyBanc Capital Markets as joint lead arrangers. 

“Since the beginning of 2012, Griffin-American Healthcare REIT II has expanded its portfolio of healthcare-related properties by more than 60 percent, based on purchase price, to approximately $724 million,” said Jeff Hanson, principal of American Healthcare Investors and chairman and chief executive officer of Griffin-American Healthcare REIT II in a statement. “Thanks in part to lending partners like Bank of America, KeyBank National Association and the other lender parties to this new line of credit, we are equipped to continue our pursuit of attractive acquisitions.”

Bank of America will serve as the administrative agent with KeyBank National Association acting as syndication agent.

The credit line may be increased up to $350 million if it meets certain conditions, and can be used to acquire, finance, or refinance properties, as well as for other corporate purses. It will mature on June 5, 2015, but carries the possibility of a one-year extension.

The REIT’s operating partnership may choose draws under the facility bear an annual interest rate of either 1) the Eurodollar Rate plus a margin ranging from 2.0% to 3.0% based on the REIT’s consolidated leverage ration, or 2) the greater of Bank of America’s prime rate, the Federal Funds Rate plus 0.50%, or the one-month Eurodollar Rate plus 1.0%, plus a margin ranging from 1.0% to 2.0% based on the REIT’s consolidated leveraged ratio. 

The new unsecured line of credit replaces two secured lines of credit totaling $116.5 million, previously provided by Bank of America and KeyBank National Assocaition. 

Lancaster Pollard Provides $6.7 Million in Refinancing for Skilled Nursing Facility

Lancaster Pollard was able to obtain a $6.7 million refinancing loan for Regency Nursing Care Residence, a family-owned and operated licensed skilled nursing facility with 99 beds in semi-private and private suites. 

The borrower had been recently certified by the Centers for Medicare & Medicaid Services (CMS) and needed to upgrade the facility’s interior and exterior building components so it could remain in compliance with codes and attract new residents. Regency had an existing loan with a community bank and wanted to refinance into a non-recourse, long-term financing structure to obtain a more cost-effective solution to upgrade the facility.

Lancaster Pollard recommended using FHA’s Section 232/223(f) program to refinance the existing debt, and obtained a 30-year loan with a low interest rate while providing more than $500,000 in immediate improvements. The firm was also able to establish a replacement reserve deposit of more than $700,000 for near- and long-term improvements. The refinance paid off the mortgage note along with several working capital lines, and established one long-term debt payment that’s more manageable for the family-run business. 

The firm was also able to negotiate a one-year lockout followed by three years of minimal prepayment penalties decreasing to par after year four to allow the borrowers to maintain flexibility.