Formation had been leasing the properties from Health Care REIT, which offered to sell the assets to Formation, Gilleland says. The portfolio compromises 760 licensed beds. The loan has a five-year term with an interest rate below 7% and an LTV of 68%.
Cash flow for the transaction is $8.6 million, Gilleland says, with rent penciling in at $6 million. The average occupancy rate is 92%. CapitalSource recently sold off several health care holdings, including 143 assets to Omega for $1 billion earlier this year. However the company has not exited the health care real estate sector, Gilleland says. On the contrary, it views it as a core asset for its business model. Going forward, it plans to intensify health care lending, seeking out deals similar to the Formation transaction.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
