LTC Properties, Inc. LTC (“the Company”) announced today $108.7 million
of transactions that have closed or are expected to close by December 31, 2012
and one $12.0 million transaction that is anticipated to close in 2013.
The Company announced the details of the transactions as follows:
In December 2012, the Company entered into an agreement to purchase three
assisted living facilities with a total of 202 units and three memory care
facilities with a total of 136 units for an aggregate purchase price of
$94.0 million. The properties have a combined average age of approximately 12
years and all but one of the properties are located in the top 31 Metropolitan
Statistical Areas ("MSA"). Three of the properties are located in New Jersey,
two are located in Colorado and one is located in Pennsylvania. The Company
plans to finance the acquisition with funds drawn from its unsecured revolving
line of credit and the assumption of approximately $6.8 million of HUD debt
which bears interest at 3.75% and matures in 2051. The transaction is
scheduled to close in two phases. The first phase is expected to close prior
to December 31, 2012 and includes five properties with a combined purchase
price of $82.0 million. Closing of the second phase is subject to the
Company's assumption of HUD debt, which is anticipated to occur in 2013.
Simultaneous with the acquisition closing in 2012, the Company will lease the
five properties, in a master lease structure, to an entity affiliated with
Juniper Communities, LLC (“Juniper”) at an initial cash yield of 7.0% and an
estimated GAAP yield of 8.1%. The initial term of the lease is 15 years with
two 5-year renewal options and annual rent escalations of 1.5% for the first
two years of the master lease and annual rent escalations of 2.25% thereafter.
Simultaneous with the acquisition of the property secured by HUD debt, the
Company will lease the property to an entity affiliated with Juniper under
similar terms and conditions as the master lease. Additionally in December
2012, the Company entered into an agreement to fund a $5.1 million two-year
interest-only bridge loan to an affiliate of Juniper. The loan will be secured
by a 70-unit assisted living facility in Pennsylvania and will bear interest
at 7.0% annually increasing by 1.5% in the second year. The Company expects
the loan origination to be completed by December 31, 2012.
In November 2012, the Company originated a $10.6 million construction loan to
affiliates of SCI Construction, Ltd., an experienced developer of skilled
nursing facilities. The loan is secured by an operational 106-bed skilled
nursing facility and a 5.62 acre vacant parcel of land in Slinger, WI
(Milwaukee MSA) upon which a 106-bed replacement facility will be constructed.
At closing, the Company funded $2.6 million of loan proceeds for the
borrower's acquisition of the existing, operational facility and the vacant
land parcel. Interest on the loan will be paid monthly in arrears at a rate of
9.0% increasing 25 basis points annually. The term of the loan is 10 years and
is pre-payable after the 32^nd month following the issuance of the certificate
of occupancy. The borrower has leased both properties to entities within the
Fundamental family of companies (“Fundamental”), a nationwide group of skilled
nursing facility operators. The agreement gives the Company the right to
purchase the replacement facility for $13.5 million during an 18 month period
beginning on the first anniversary of the issuance of the certificate of
occupancy. If the purchase option is exercised, the replacement facility will
be added to an existing master lease with other Fundamental affiliates at a
lease rate equivalent to the interest rate in effect on the loan at the time
the purchase option is exercised.
In October 2012, the Company purchased a 4.59 acre vacant parcel of land in
Wichita, Kansas for $0.7 million and entered into a lease and development
commitment with affiliates of Oxford Development Holdings, LLC (“Oxford”) in
an amount not to exceed $9.9 million for the construction of a 77-unit
assisted living and memory care facility. Rent at the rate of 9.25% will be
calculated based on the land purchase price and construction costs funded plus
9.0% compounded on the land purchase price and each advance under the
commitment. Payment of rent will begin on the earlier of the issuance of the
certificate of occupancy or the 15^th month following the land acquisition.
The lease has a 10-year initial term, two 5-year renewal options and annual
escalations of 2.5%. This transaction was previously disclosed as a subsequent
event in the Company's 10-Q for the quarter ended September 30, 2012.
Additionally, the Company committed to fund, after receipt of the certificate
of occupancy, a $0.4 million line of credit at an interest rate of 12%,
maturing in 2017.
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