Sabra Health Care REIT (NASDAQ:SBRA) announced on Monday the origination of a mezzanine loan investment for $12.4 million with an affiliate of Chai Facilities Acquisition Company, LLC that carries an up to $50 million acquisition option for several senior care properties.
Chai Facilities Acquisition Company is the indirect owner of 12 skilled nursing facilities with a total of 1,689 licensed beds located in seven states. The mezzanine loan has a two-year term with a fixed interest rate of 12% a year and is secured by the borrowers’ equity interests in the entities that own the Chai portfolio.
Sabra also has the option to purchase up to $50 million of properties within the Chai portfolio. If the REIT chooses to exercise that option, it expects to enter into a new 15-year master lease with two five-year renewal options at an initial cash yield of 9.5% with annual rent increases equal to the greater of the change in the consumer price index and 3.0%.
“The operating team for the Chai portfolio currently operates two of Sabra’s Texas skilled nursing facilities. We appreciate having the opportunity to expand our relationship with SLC at the time we exercise our purchase option,” said Rick Matros, CEO and chairman of Sabra, in a statement. “The purchase option provides us with the opportunity to choose which facilities we bring into the Sabra portfolio.”
In late June, Sabra also announced the acquisition of a 32-unit assisted living community in Woodstock, Va. for $6.2 million. The REIT entered a triple-net lease agreement with affiliates of Greenfield Senior Living, Inc. to operate the community. The lease has an initial term of 15 years with two 10-year renewal options and provides for annual rent escalators of 3.0%, resulting in annual lease revenues of $0.6 million and an initial yield on cash rent of 7.75%.
The purchase was funded with available cash.
“We have been developing a relationship with the Greenfield Senior Living team for over a year and are very pleased to have found a transaction that works for both parties,” said Matros of the acquisition. “We look forward to developing a deeper relationship with them through future transactions.”
Written by Alyssa Gerace