Deutsche Bank has sold off a $940m financing package it provided for a national portfolio of nursing homes operated under the SavaSeniorCare name and controlled by real estate mogul Rubin Schron.
The single floating-rate mortgage loan – with an initial two-year term and three one-year extension options – is secured by a portfolio of 167 nursing homes with 20,222 beds across 19 states.
The financing includes a $550m A-note, which was securitized and priced under COMM 2014-SAVA late last month; and an additional $150m B-note and a triple-tiered $240m mezzanine loan, which entities including GE Capital and Apollo Commercial Real Estate Finance have bought.
Deutsche priced the four-tranche CMBS deal’s AAA tranche at Libor plus 115 basis points and the BBB-rated D-class at Libor plus 310 basis points. The first distribution date for the CMBS offering is 17 July, with a mix of hedge funds and other investors said to be among its suitors.
NorthStar Healthcare Income, a public non-traded healthcare REIT, has closed on the $75m subordinate (C) portion of the mezzanine loan. It has the highest spread in the debt stack at a floating rate of 10.27% above one-month LIBOR (see chart, from a Fitch Ratings pre-sale report).
Apollo Commercial Real Estate Finance, an originator and investor in commercial real estate debt, closed on the remaining pieces of the mezzanine loan, totaling $165m; and GE Capital Real Estate took the $150m B-note, a source said. GE Capital agreed a competitive spread to clinch the whole B-note.
The underlying mortgage loan allows for the portfolio’s maturing $920 million of existing CMBS debt (funded in 2006) to be paid off. Fitch noted that the loan features amortization debt yield triggers, which will cause the loan to amortize by $18m per year on the total debt stack if the debt yield falls below 16% during the fourth or fifth year of the loan.
The portfolio is master-leased and run by SavaSeniorCare, the fifth largest operator of nursing homes in the US. About 63% of the facilities are in North Carolina, Texas, Colorado and Maryland, with occupancy across the portfolio at 84.4% as of first-quarter 2014.
Schron, principal at Cammeby’s International and owner of New York City’s Woolworth Building, gained control of the SavaSeniorCare business in 2011 after years of legal wrangling with co-investors.
Housing & Healthcare Finance, which worked on the original financing of the portfolio in 2004 and a refinancing in 2006, assisted Deutsche Bank with the underwriting.