An affiliate of Bickford Senior Living Group, L.L.C. master leased the facilities from Care YBE for 15 years with four 10-year renewal options. Each facility has been subleased to the original seller/operator of the facility.
F. Scott Kellman, President and Chief Executive Officer of Care, stated, "Bickford's dedication to quality care has garnered the Eby family an unparalleled reputation in senior housing. We are extremely gratified that the Ebys have chosen to partner with Care to drive their growth strategy."
Joe Eby, Chief Operating Officer of Bickford, said, "We at Bickford Senior Living are extremely excited to form this partnership. The completion of this transaction and the relationship with Care is integral in our desire for continued growth and to continue our mission of enriching happiness in the lives of our residents and families."
Care funded the investment through cash on hand and approximately $74.6 million of mortgage financing from Fannie Mae. These mortgages will mature in seven years, are interest-only for the first year, and carry a fixed annual interest rate of 6.845%. Red Mortgage Capital, Inc. arranged the financing with Fannie Mae.
The transaction provides Bickford the potential to achieve an earn-out of approximately $7.2 million based on property performance through the second anniversary of the closing. Earn-out funds will be allocated first to finance expansion projects at the acquired properties until the scheduled projects are completed, after which time additional advances will provide distributions to Bickford. Any such funds advanced shall result in a proportionate increase in the Base Rent due under the Master Lease.
Transaction Highlights:
-- Care acquired 12 Senior Housing Facilities consisting of Assisted Living, Independent Living & Alzheimer's Facilities located in the Midwest.
-- Care will receive a Base Lease Rate of 8.2%, calculated on Care's aggregate purchase price of $100.8 million, with escalations of 3.0% per annum. Care will also receive Additional Base Rent ("ABR") of 0.26% on the aggregate purchase price, with escalations of 3.0% per annum during the initial term. The ABR will accrue during the first 36 months of lease term, and beginning in month 37, the accrued ABR will be payable over a 24 month period.
-- Care received additional security in the form of pledges of equity interests in 6 Assisted Living and Alzheimer's Facilities (241 units) located in Iowa and Nebraska and a second lien on a 28 unit Assisted Living Facility located in Indiana. This additional security will be released as target rent coverages are achieved. The acquisition closed with a lease coverage of 1.07x based upon annualized trailing four month results as of April 2008.
-- Care expands its relationship with Bickford, which has been highly successful operating quality assisted living, independent living, and Alzheimer's care facilities in Illinois, Indiana, Iowa, Michigan, Missouri and Nebraska.
The portfolio, developed and managed by Bickford, a long-time leader and innovator in the senior housing industry, contains 569 units and is located in Illinois (5 facilities), Indiana (1 facility), Iowa (5 facilities) and Nebraska (1 facility). The properties were all constructed in the last 11 years, with six of the facilities built in the last five years. The properties are well-positioned for continued success within their communities and have experienced aggregate occupancy levels in excess of 90 percent over the last two full years. -- Care Investment Trust Inc.
