Even taking into consideration their previous history with each other, a $50-million credit facility on the part of KeyBank Real Estate Capital for Sunrise Senior Living would seem unlikely in this current environment.
Sunrise Senior Living has had its difficulties, illustrated most recently by its recent earnings report in which it stated net income for the second quarter of 2011 of $1.3 million, compared to $46.3 million for Q2 of 2010. It also reported that the sequential occupancy rate of its real estate holdings dropped by 50 basis points from first quarter 2011 to the second quarter.
As for KeyBank, it has gone through a period of retrenchment after the crash, reemerging as a smaller, more focused and, some would say, even more conservative lender. Yet it decided to go forward with the senior secured credit facility, which Sunrise will be using for working capital and general corporate purposes, for some very practical and far-sighted reasons. It is also bringing to the table its treasury management operations and other potential business.
Not that KeyBank ignored possible warnings of trouble at Sunrise. “Even though there was a lot of noise and issues swirling around Sunrise, it became clear to KeyBank that its management team was focused on divesting itself of its problem assets in an aggressive manner and timetable,” says Henry Alonso, a Cleveland, OH-based senior vice president of KeyBank Real Estate Capital Healthcare Group. “All together, the business will translate into capital markets opportunities, such as capital raises and agency opportunities. It is not just a balance sheet transaction for us.”
...To read the rest of the story, visit the October 2011 issue of Real Estate Forum.
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