Senior Housing Finance Activity: Ensign, CareTrust

The Ensign Group Announces $250 Million Revolving Credit Facility

The Ensign Group, Inc. (Nasdaq: ENSG), which is based in Mission Viejo, California, announced that Ensign and its operating subsidiaries have boosted its revolving credit facility by $100 million to an aggregate of $250 million, $105 million of which was drawn as of Feb. 1.

The credit facility is supported by a lending consortium arranged by Wells Fargo Securities, LLC and SunTrust Robinson Humphrey, Inc. The amendment also reduced the LIBOR-based interest rate by 50 basis points and extended the termination date for the revolving commitment to Feb. 5, 2021, among other things.

SunTrust Robinson Humphrey is the trade name for the corporate and investment banking services of SunTrust Banks, Inc. and its subsidiaries.

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“This credit facility further strengthens our long-term capital structure and, together with our strong operating performance, extends Ensign’s ability to continue expanding our portfolio of health care operations,” said Suzanne Snapper, Ensign’s chief financial officer. “The continued confidence shown by our banking partners is a testament to Ensign’s solid operating history and our strong balance sheet, and we look forward to working with them further as we continue our strategy of disciplined growth.”

Snapper said the proceeds of the credit facility will be utilized to fund acquisitions, upgrade and renovate existing and future facilities, cover working capital needs and for other corporate purposes. She also confirmed that Ensign’s current rent-adjusted net-debt-to-EBITDAR ratio is 3.37x.

The Ensign Group, Inc.’s independent operating subsidiaries provide a broad spectrum of assisted living and skilled nursing services, physical, occupational and speech therapies, home health and hospice services, urgent care services and other rehabilitative and health care services at 187 facilities, 14 hospice agencies, 15 home health agencies, three home care businesses and 17 urgent care clinics in Arizona, California, Texas, Washington, Idaho, Utah, Colorado, Nevada, Iowa, Nebraska, Oregon, Wisconsin, Kansas and South Carolina. 

CareTrust REIT Inc. Refinances $100 Million in Debt, Expands Credit Facility by $100 Million

CareTrust REIT Inc. (NASDAQ: CTRE), a publicly traded seniors housing and health care REIT based in San Clemente, California, has expanded its revolving credit facility from $300 million to $400 million, while at the same time entering into a new $100 million, seven-year, non-amortizing unsecured term loan.

About $95 million of the term loan proceeds were utilized to pay off and terminate CareTrust’s existing secured mortgage indebtedness under its 2006 credit agreement with General Electric Capital Corp.

The lower interest rate resulting from the refinancing is anticipated to generate about $1.3 million in yearly savings.

CBRE Secures $28 Million Loan for Heritage Senior Living, Care Investment Trust Joint Venture

Aron Will, the executive vice president of CBRE’s Senior Housing Debt & Structured Finance practice, has arranged acquisition financing on behalf of a joint venture between Care Investment Trust and affiliates of Pennsylvania-based Heritage Senior Living for The Birches at Newtown, a recently developed, 120-licensed-bed assisted living/memory care community in Newton, Pennsylvania.

CBRE secured a $28 million, 7-year fixed rate loan from a regional bank that includes 24 months of interest only. CBRE also sourced three additional non-recourse quotes.

The Birches at Newtown, which will continue to be managed by Heritage, originally opened in March 2014 and achieved stabilized occupancy within 13 months of operations.

Care Investment Trust, a real estate investment company focused on the seniors housing sector, is a wholly-owned subsidiary of Tiptree Financial Inc. (“Tiptree”) (NASDAQ: TIPT).

Heritage Senior Living owns, develops, manages and operates seniors housing communities located across the Mid-Atlantic region. Heritage currently operates 15 seniors housing communities, four of which affiliates of Care and Heritage jointly own. 

Cain Brothers Helps Lutheran Homes Society Secure $40 Million in Bonds

Cain Brothers served as the sole investment banking advisor for the issuance of $40,623,994 Series 2015 Direct Bank Purchase Bonds for Ohio-based not-for-profit Lutheran Homes Society (LHS).

The Series 2015 Direct Purchase Financing consists of $1.4 million of taxable bonds and $39.3 million of tax-exempt bonds. Cain Brothers also helped LHS to enter into a floating-to-fixed pay interest rate swap, which effectively hedges the variable interest rate on the tax-exempt series of bonds. The proceeds of the Series 2015 Bonds were used mainly to refinance the Series 2010 Bonds and fund multiple renovation and small acquisition projects. Taking advantage of the currently low interest rate market allowed LHS to realize substantial debt service savings.

LHS currently operates four elderly care communities and 12 market-rate independent living /assisted living units.

Care Capital Properties Enters Into Long-Term Fixed Rate Financing Agreements on $600 Million of Debt

Chicago-based health care real estate investment trust (REIT) Care Capital Properties, Inc. (NYSE: CCP) has swapped or refinanced a total of $600 million of debt, effectively converting the interest on that debt from floating rates to fixed rates.

CCP closed a new $200 million unsecured, seven-year term loan initially priced at 180 basis points over LIBOR. The proceeds of the term loan were utilized to repay a portion of the company’s existing $600 million unsecured term loan due August 2017. As part of this transaction, CCP entered into deals to swap the full notional amount of the term loan into an all-in fixed interest rate of 3.25%. Separately, the company entered into agreements to swap $400 million of its $800 million unsecured term loan due August 2020 from 150 basis points over LIBOR to an all-in fixed interest rate of 2.73%.

“CCP has made a great start in expeditiously replacing our interim financing with longer-term, fixed rate borrowings that have a staggered maturity schedule, one of our top priorities for 2016. With these transactions, we fixed the rate on over 40% of our term debt, repaid $200 million of our two-year unsecured term loan and extended our debt maturities,” CCP Chief Executive Officer Raymond J. Lewis said. “We now effectively have $600 million of fixed rate debt with a weighted average maturity of 5.4 years and a weighted average interest rate of 2.9%. Our commitment to establishing our permanent capital structure includes ensuring that we can access debt and equity from multiple sources.”

KeyBank Provides $28.6 Million in Financing for Seniors Housing Development in New York

KeyBank has provided $28.6 million in financing for Cambray Court Apartments, an affordable seniors housing redevelopment in St. Lawrence County, New York.

The redevelopment is in partnership with Omni Housing Development LLC and managed by United Helpers. The project is expected to replace 72 garden-style, flood-threatened apartments with one accessible, four-story, energy-efficient building with 71 apartment units. 

The redevelopment project team includes Bette & Cring Construction Group and Beardsley Architects and Engineers.

Designated as affordable housing, the community is set to have 52 units for residents earning 30% to 50% or less of the area median income, 13 units for residents earning at or below 60% of the area median income; five units for residents earning 80% of the area median income; and one unit for residents earning 90% of the area median income. 

Capital One Closes $6.8 Million FHA Loan for Acquisition of Illinois Supportive Living and Skilled Nursing Facility

Capital One announced it has provided a $6.8 million, fixed-rate, HUD 232/223(f) loan to refinance a skilled nursing facility in Northern Illinois that has 134 beds. The loan has a term of 35 years. Senior Vice President Joshua Rosen, who leads Capital One’s agency health care lending from the company’s office in Chicago, originated the transaction.

As one of the leading participants in HUD’s LEAN lending program, Capital One Multifamily can streamline the application process and delivery of 232/223(f) financing, an essential capability in meeting both the purchaser’s and seller’s need for a quick execution.

The client, who was not disclosed, has turned to the 232/223(f) program multiple times in recent years.

“For investors in skilled nursing properties, the 232/223(f) program is a valuable tool,” Rosen said.

The property consists of two stand-alone buildings on two tax parcels that have been zoned as one parcel with a single special use permit.

Capital One Bank’s Commercial Real Estate Group offers a comprehensive variety of financing solutions for property owners and developers across the country, including balance sheet and agency lending.

Lancaster Pollard Secures $6 Million Loan for Minnesota Senior Housing Facility

Ownership at Sterling Pointe Senior Living, a 57-unit independent living, assisted living and memory care facility in Princeton, Minnesota, wanted to refinance its existing debt utilizing FHA/HUD financing in order to benefit from the long-term, low interest rate and nonrecourse feature. However, a portion of the existing debt consisted of a tax increment financing (TIF) loan, which can be incompatible with FHA/HUD financing.

Lancaster Pollard told HUD that paying off the TIF bank loan, which was serviced and collateralized by the TIF development agreement, would benefit Sterling Pointe because the cash flow received from the City of Princeton vis-a-vis the TIF agreement would flow directly to the borrower. Eventually, Lancaster Pollard orchestrated a financing solution that showed that the TIF loan payoff was an eligible use of proceeds and that the value of the TIF cash flow should be included in the project value.

This resulted in a $6 million loan insured by the FHA Sec. 232/223(f) program that pays off the first mortgage, two member notes and the TIF loan. With the refinance, Sterling Pointe has permanent debt financing for 35 years with a low interest rate. Quintin Harris, a senior vice president with Lancaster Pollard in Minneapolis, led the transaction.

Berkeley Point Capital Closes $15 Million Refinance Loan for Senior Housing Facility in Ohio

Berkeley Point Capital closed a $15 million refinance loan for the 231-unit 10 Wilmington Place seniors housing facility in Dayton, Ohio, on Dec. 30, 2015.

The 20-year, fixed-rate Freddie Mac loan has added flexibility via a yield maintenance structure of seven years. 

Constructed in the 1850s, 10 Wilmington Place was added to the National Historic Register in 1979. Now, the 24-acre campus has 22 memory care, 58 assisted living and 151 independent living units.

Cain Brothers Advises Financing for Christian Care Communities in Kentucky

Cain Brothers served as investment banking advisor and swap advisor to Christian Care Communities (CCC) for the issuance of $49.9 million tax-exempt and taxable bonds and the execution of $49.8 million of fixed-pay interest rate swaps.

CCC is the largest faith-based not-for-profit provider of senior retirement living and long-term care for seniors in Kentucky The organization operates senior housing facilities in 11 cities throughout Kentucky that offer nursing care, personal care, independent living, assisted living, short-term rehabilitation, memory care, home health and adult day care services.

The aggregate Series 2016 financing consisted of $13 million of taxable term loans, $37 million of tax-exempt direct purchase bonds and a $1.5 million line of credit. All debt was bought and provided by two commercial banks. To eliminate interest rate risk related to the variable underlying rate of the tax-exempt bonds and taxable term loans, Cain Brothers successfully negotiated fixed-pay interest rate swaps that fully hedge the newly issued debt.

Proceeds from the financing were mainly utilized to refinance all of CCC’s outstanding debt, including 4 series of public bonds, 5 lines of credit and 12 capital leases. The financing also funded $1.8 million of renovation projects, $4 million of working capital funds and $3 million of reimbursement for prior capital expenditures. Additionally, as part of the financing, Cain Brothers successfully negotiated a discounted termination of CCC’s existing fixed-pay swap.

The Series 2016 financing met the goals of CCC by completely simplifying and restructuring CCC’s balance sheet, as well as stabilizing CCC’s liquidity position.

Lancaster Pollard Arranges $6 Million Refinancing for Senior Community in Minnesota

Lancaster Pollard arranged a $6 million FHA loan to refinance Sterling Pointe Senior Living, a 57-unit independent living, assisted living and memory care facility in Princeton, Minnesota.

Quintin Harris, senior vice president with Lancaster Pollard in Minneapolis, led the transaction.

The community’s ownership wanted to refinance its existing debt using FHA/HUD in order to benefit from the long-term low interest rates and nonrecourse feature, as well as pay off a tax increment financing loan. 

Written by Mary Kate Nelson

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