CHEVY CHASE, MD-CapitalSource has received approximately $119 million of cash proceeds from HUD mortgage financing on long-term care properties that will be included among the 40 facilities expected to be sold to Omega Healthcare Investors Inc. CapitalSource struck a deal to sell the bulk of its healthcare portfolio to Omega in November.
These closing are the first of a multi-step transaction outlined under the terms of the Securities Purchase Agreement between the two companies.
CapitalSource is using the proceeds from the HUD mortgages to add liquidity and pay down the company’s syndicated bank facility to $325 million. With these closings and other sales, the company has realized approximately $347 million before expenses of the approximately $495 million anticipated from the monetization of its net lease asset portfolio, according to James J. Pieczynski, president of the CapitalSource Healthcare Real Estate business.
CapitalSource is not exiting the healthcare real estate market, even as it sells off its portfolio. Instead the company will be focusing on lending to this space, which it views as relatively healthy. In an earlier interview with GlobeSt.com, CapitalSource’s Steve Gilleland points to a recent $37 million first mortgage debt financing as the type of deals it wants to underwrite.
That transaction involved the sale of six skilled nursing assets in Florida and Pennsylvania to Formation Capital, a private equity shop in Atlanta. Formation acquired the assets from Health Care REIT. The loan has a five-year term with an interest rate below 7%, an LTV of 68%, cash flow of $8.6 million, and rent penciling in at $6 million. In 2010, CapitalSource plans to underwrite between $200 million to $300 million in such transactions, Gilleland says.
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