Senior Housing Finance Activity: Five Star Tender Offer

ABP Acquisition LLC Announces Tender Offer Results for Five Star Shares

On Nov. 11, ABP Acquisition LLC announced the results of its tender offer to buy as many as 18 million shares of Five Star Quality Care, Inc. (Nasdaq: FVE) at a purchase price of $3.00 per share, net to the seller in cash, without interest. ABP Acquisition LLC is owned by Five Star Quality Care Board of Directors Managing Director Barry M. Portnoy, who also serves as a managing trustee on the board of Senior Housing Properties Trust, a real estate investment trust (REIT) that acts as Five Star’s major landlord.

This appears to have consolidated the Portnoy family’s control of the company, which has been challenged by activist shareholders William Thomas and Robert Thomas, co-founders of senior housing owner/operator Senior Star. The Thomas brothers launched an effort to make a competing tender offer, and also are seeking to place a new director on the Five Star board. 

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Directors at Five Star waived certain ownership restrictions to make the Portnoy tender offer possible. Senior Star sought similar waivers but were turned down at least temporarily by Five Star’s board.

ABP’s tender offer expired at midnight EST on Nov. 10. The depositary for the tender offer has reported that the total number of shares tendered was 22,769,337, based upon a preliminary count. As a result, it seems that the tender offer was over-subscribed. Following the terms of the tender offer, the number of shares that ABP will purchase from tendering stockholders will be prorated so that ABP only purchases 18 million shares at most, according to a press release.

The final results of the tender offer is set to be announced after the confirmation of the final number of shares properly tendered. Payment for shares accepted for purchase will be made quickly, in accordance with the terms of the tender offer. All shares not accepted for payment will be returned to the stockholder or, in the case of tendered shares delivered by book entry transfer, credited to the account of the book entry transfer facility from which the transfer had been made, as per the terms of the tender offer.

CBRE Arranges Loan for Acquisition of Independent Living Community in California

Aron Will, vice chairman of CBRE National Senior Housing, and Kevin Randles, senior vice president of CBRE’s Debt and Structured Finance office in Sacramento, California, recently arranged acquisition financing on behalf of Sacramento-based Ray Stone, Inc. to acquire River Oaks Retirement Community, a 102-unit independent living community in Redding, California.

CBRE Multifamily Capital originated a fixed-rate loan via its Fannie Mae DUS multifamily loan origination program. The loan amount was undisclosed.

Once the transaction closes, Ray Stone, Inc. will manage River Oaks Retirement Community. Ray Stone, Inc. currently operates seven other California senior living communities with more than 900 units in total.

Grandbridge Secures $43.5 Million Loan for Senior Living Joint Venture

Grandbridge Real Estate Capital’s Seniors Housing and Healthcare Finance team recently facilitated the closing of a $43.5 million acquisition/bridge loan to a joint venture between Hickory, North Carolina-based senior living owner/operator Meridian Senior Living and Chicago-based investment management firm Blue Vista Capital Management, LLC.

The non-recourse loan was secured by two assisted living communities: the 88-unit Country House in Yorktown Heights, New York, and the 147-unit Chevy Chase House in Washington, D.C.

Funding for the acquisition was provided through BB&T Real Estate Funding, Grandbridge’s exclusive proprietary lending platform. Senior Vice President Richard Thomas and Vice President Meredith Davis originated the transaction.

RED Capital Arranges $29 Million Loan for Kensington Senior Living LLC

RED Capital Group recently arranged a $29 million Fannie Mae loan for Kensington SM GP LLC, which will use the funds to refinance The Kensington Sierra Madre, a luxury assisted living and memory care community in Sierra Madre, California.

The Kensington Sierra Madre, which is owned and operated by Kensington Senior Living LLC, has 41 assisted living units and 34 memory care units. 

The financing replaces the community’s original construction loan, which was also provided by RED.

Kensington Senior Living owns and operates five assisted living communities in California, Virginia, Maryland and New York, with an additional four currently in development.

Harborview Capital Partners Closes $10.6 Million HUD Refinancing for Minnesota Assisted Living Community

Harborview Capital Partners, a commercial real estate finance, advisory and equity firm, recently arranged a $10.6 million refinancing for a 115-bed assisted living community in St. Paul, Minnesota. The name of the community was not disclosed.

The non-recourse HUD loan has a fixed interest rate and a 30-year term and a fixed interest rate. The borrower is based in Chicago.

The transaction was originated by Harborview’s principals, Ephraim Kutner and Jonathan Kutner.

Capital One Closes $14.1 Million FHA Loan Modification for California Senior Living Community

Capital One recently announced that it provided a $14.1 million HUD loan modification to a 100-bed assisted living and memory care community in Tequesta, Florida, called Tequesta Terrace. The community is owned by Terrace Communities, which also owns assisted living communities in Florida, New Hampshire, Vermont and Maine.

Capital One Senior Vice President of Originations Carolyn Whatley, who is based in the bank’s Palm Beach office, originated the transaction. The fixed-rate, non-recourse loan has 32+ years remaining on the original 35-year fully amortizing term.

“We previously refinanced a portfolio for Terrace Communities that included Tequesta Terrace,” Whatley said in a press release. “Due to a timing differential, this property closed with a slightly higher interest rate than the other properties. We monitored the rate environment and took advantage of HUD’s loan modification feature, which allows an interest rate reduction. We’re happy that we were able to provide Terrace Communities with a financial solution that fits well with their strategy as long-term holders of the property.”

Whatley and her team provided an analysis of the estimated savings to the borrowers, who decided to move forward with the loan modification—essentially an interest rate reset and reset of the prepayment terms, according to Capital One. The loan is assumable and also can be prepaid, so it offers flexibility if long-term strategic goals shift.

RED Capital and Sentio Healthcare Properties Secure $49.1 Million Loan for Senior Living Community in Texas

RED Capital Partners, LLC, the proprietary debt and equity banking arm of comprehensive capital provider RED Capital Group, LLC, and Sentio Healthcare Properties Inc. recently partnered on a $41.9 million loan to finance the development of The Delaney at Georgetown Village, a 211-unit Class A senior living community in Georgetown, Texas.

Specifically, RED provided a $20 million balance sheet loan financing, with Sentio funding the balance. The project was developed and is owned by affiliates of Des Moines, Iowa-based Life Care Services, LLC.

Construction was almost complete on The Delaney, which has 120 independent living units, 55 assisted living units and 36 memory care units, when RED closed on the loan.

“We are encouraged by the development progress at the property,” said Spencer Smith, SVP of Sentio Investments. “The RED team was able to understand our goals and successfully helped structure a loan financing that worked well for RED, Sentio, and LCS.”

“We are very happy to be working with John Mark Ramsey and his team at Sentio,” said Kathryn Burton Gray, Senior Managing Director for RED. “This is the type of creative financing that allows relationship partners to leverage off RED for the entire capital stack— from bridge loans to permanent lending.“

Sentio is a public, non-listed real estate investment trust (REIT) that invests only in health care-related real estate. Sentio Healthcare’s current portfolio has 34 properties across 16 different states.

Written by Mary Kate Nelson

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