NHI Wraps Up $67M Purchase of Six Florida Nursing Facilities, Plans to Purchase More

February 4, 2010
By Barbra Murray, Contributing Editor

NHI has been actively acquiring during the global financial meltdown, and having just closed on a $100 million unsecured revolving credit facility, the healthcare REIT is on track to make even more investments.

The skilled nursing centers are leased to affiliates of Health Services Management Inc. and account for an aggregate 780 beds. NHI has a history with the properties; the company predominantly finances healthcare real state through purchase-leaseback transactions and mortgage loans, and the six Florida assets have been part of the company’s mortgage loan portfolio for the last 16 years. Furthermore, it is the mortgage on the group of six facilities that spurred the recent transaction with CFA.

NHI originally acquired the properties from a bankruptcy trustee and then provided financing for CFA to purchase them for $32.7 million in 2000. Since then, the original July 31, 2001 maturity date of the loan has been pushed back several times, with the last extension ending December 31, 2008 on a remaining debt of approximately $23.3 million.

However, on December 30, 2008, CFA filed for Chapter 11 bankruptcy and just days later on January 2, 2009, the company filed an adversary proceeding complaint against NHI as part of the bankruptcy case. CFA accused the REIT of having exercised total control over CFA’s board of directors, and with that power, guided CFA into the six-property purchase deal under unfair terms. NHI denied the charges, but with this week’s acquisition the company rids itself of the pesky pending litigation.

NHI is financing the purchase of the CFA portfolio with the satisfaction of CFA’s aforementioned $23.3 million mortgage note, as well as $29.7 million in cash deposits and a $14 million chunk from its revolving credit facility. Provided by Regions Bank and Pinnacle National Bank, NHI’s new unsecured credit facility will also help the REIT continue, if not expand, the level of investment activity it engaged in last year. Its deals in 2009 included the purchase of a group of five assisted living facilities from Bickford Senior Living in a $28 million sale-leaseback transaction, and the acquisition of four skilled nursing properties from Legend Healthcare L.L.C. in sale-leaseback transactions totaling $55.5 million.

Senior housing has not escaped the ravages of the economic downturn, but lenders are not shying away from the sector completely. Over the last few months, Omega Healthcare Investors Inc. got its hands on a $100 million term loan from General Electric Capital Corp; EmpRes Healthcare Inc. secured a new $25 million revolving credit facility from Healthcare Finance Group Inc.; and Ventas Inc. received two revolver commitments totaling $85 million, which increased the company’s aggregate revolving credit facilities to $1 billion.