Capital Senior Living Inks $110M Refi

DALLAS-The locally based Capital Senior Living Corp. has closed the first of two refinances of its portfolio, replacing $125 million of variable rate debt with $110 million at a 6.29% fixed rate for a 230 basis points savings. The first leg has been collateralized by 15 of the company's 25 wholly owned properties.

Capmark Finance Inc. arranged the 10-year, cross-collateralized loans through the Federal Home Loan Mortgage Corp.'s Freddie Mac fixed-to-float program. The refinance, also a cross-defaulted vehicle, netted a fixed-rate interest rate for nine years, with a floating rate in the last year "to provide flexibility regarding financing alternatives at that time," according to this morning's press release.

The fresh capital was used to nip nearly $15 million of principal from other debt packages to drive a projected $1.3 million in interest savings. The long-term savings is calculated at nearly $2.5 million. Since the year began, Capital Senior Living has pruned its debt by roughly $60 million to take the newest total to $194 million, of which $161 million is tied to 21 assets at an average 6.2% fixed rate.

"We have now fixed or capped the interest rates on our entire wholly owned portfolio and successfully completed one of our major objectives for 2006," says Lawrence A. Cohen, Capital Senior Living's CEO. The first facility's 15 properties total 2,154 rooms in seven states.

Cohen tells GlobeSt.com that the second refinance for four properties, totaling 544 rooms in three states "is pretty close to being finished." The $33-million facility will have an interest rate that's 260 points over Libor. The company bought an interest rate cap to keep Libor at 5% and set up a maximum 7.6% rate. The end result is a blended average rate of about 6.5% for the entire 3,926-room, 25-property portfolio.

"It's a tremendous savings," Cohen says of the double refinance. "It's nice to have fixed rate. It reduces the risk and is giving us a very strong balance sheet."