REIT Enters Potential $350M Credit Line

IRVINE, CA—Griffin-American Healthcare REIT III Inc. has entered into a $60-million revolving line of credit with Merrill Lynch; Pierce, Fenner & Smith Inc.; and KeyBanc Capital Markets as joint lead arrangers. The credit line may be increased up to $350 million upon meeting certain conditions, and the credit facility may be utilized to acquire, finance or refinance properties, as well as for other corporate purposes. Bank of America will serve as administrative agent, and KeyBank National Association will act as syndication agent.

The credit facility matures on August 18, 2017, but the REIT may extend it for two one-year periods upon the satisfaction of certain conditions. At the option of the REIT's operating partnership, draws under the facility bear interest at per-annum rates equal to either 1) the Eurodollar Rate plus a margin ranging from 1.95% to 2.45% based on the REIT's consolidated leverage ratio, or 2) the greater of Bank of America's prime rate, the Federal Funds Rate plus .5% or the one-month Eurodollar Rate plus 1%, plus a margin ranging from .75% to 1.25% based on the REIT's consolidated leverage ratio.

According to Jeff Hanson, a principal of American Healthcare Investors and chairman and CEO of Griffin-American Healthcare REIT III, “Thanks in part to lending partners like Bank of America, KeyBank National Association and the other lender parties to this new line of credit, Griffin-American Healthcare REIT III is equipped to continue our efficient pursuit of attractive acquisitions on behalf of our investors.”

Since the REIT is currently in an open registration period with the SEC, its principals were unable to comment further to GlobeSt.com on how the new credit facility will impact the REIT's acquisition strategy. AHI and Griffin Capital Corp. are co-sponsors of the REIT and its predecessors.

As GlobeSt.com reported earlier this month, NorthStar Realty Finance Corp. stepped up its game in the healthcare real estate arena by acquiring one of those predecessors: Griffin-American Healthcare REIT II. The two companies' boards approved the $4-billion stock-and-cash acquisition, which includes the assumption of $600 million in debt.

Griffin-American II's healthcare portfolio is mainly composed of medical-office properties and senior housing in the US and UK. NorthStar is acquiring it at a 6.4% cap rate; the portfolio increases owned real estate to about 75% of the pro forma company.