WESTLAKE VILLAGE, CA-LTC Properties, Inc. has entered into a $141 million mortgage loan agreement with affiliates of Prestige Healthcare.
The loan is to be secured by 15 properties with a total of 2,092 licensed skilled nursing beds and 24 independent living units in Michigan. Prestige Healthcare is a privately held operating company based in Louisville, KY that currently operates skilled nursing facilities with approximately 2,500 beds in seven states including Michigan.
The loan is for a term of 30 years and will bear interest at an initial rate of 9.41% for five years, escalating annually thereafter by 2.25%. Payments will be interest-only for a period of three years, after which the borrower will make interest payments along with annual principal payments of $1 million.
“LTC is very pleased to announce this transaction expanding our existing relationship with Prestige Healthcare, further diversifying our operator base, enhancing our geographic diversification and increasing our presence in the top 31 Metropolitan Statistical Areas,” said Wendy Simpson, LTC CEO and President. “Furthermore, this off-market transaction demonstrates the success of our relationship oriented marketing strategy and our strategy to invest in newer or newly renovated skilled nursing assets or properties with expansion and/or renovation potential. Although structured as a long term mortgage loan to meet the needs of our customer, this transaction embodies most elements of a long term master lease.”
Of the aggregate loan amount, LTC anticipates funding approximately $126 million during the fourth quarter of 2013 with additional forward commitments of $12.0 million for capital improvements and up to $3.0 million for short-term working capital. The loan agreement also provides, under certain conditions and based on certain operating metrics and valuation thresholds achieved and sustained within the first twelve years of the term, for additional loan proceeds of up to $40.0 million with such proceeds limited to $10.0 million per year.
The company is a self-administered real estate investment trust that primarily invests in senior housing and long-term care properties through triple-net lease transactions, mortgage loans and other investments.