CareTrust REIT enters $150 million asset-based revolver after spin-off

By Marisa Wong

Madison, Wis., June 5 – CareTrust REIT, Inc. entered into a credit agreement on May 30 for a $150 million asset-based revolving credit facility, according to an 8-K filing with the Securities and Exchange Commission.

Following its spin-off from Ensign Group, Inc., CareTrust expects to use borrowings for working capital purposes, to fund acquisitions and for general corporate purposes.

SunTrust Robinson Humphrey, Inc. and Wells Fargo Securities, LLC are the joint lead arrangers and joint bookrunners for the facility. SunTrust Bank is the administrative agent, Wells Fargo Bank, NA is the syndication agent, and Royal Bank of Canada and Regions Bank are co-documentation agents.

The credit facility is secured by some of CareTrust’s properties, and the amount available to be drawn is based on the borrowing base values attributed to those mortgaged properties. As of June 2, the amount available is $84.2 million.

The credit facility is also secured by some personal property of CareTrust’s subsidiaries that have provided mortgages, CareTrust’s interests in wholly owned subsidiary CTR Partnership, LP and CareTrust’s interests in the subsidiaries that guarantee the facility.

The credit agreement provides that, subject to obtaining commitments and pro forma compliance with financial maintenance covenants, the CTR Partnership may seek to obtain incremental revolving or term loans under the credit facility in an aggregate amount not to exceed $75 million. CareTrust does not currently have any commitments for such incremental loans, the filing noted.

The facility matures on May 30, 2018 and may be extended by one year.

Interest is equal to Libor plus a margin ranging from 200 basis points to 250 bps, depending on the debt to asset value ratio of CTR Partnership and its subsidiaries.

In addition, the operating partnership will pay a commitment fee of 35 bps to 50 bps, depending on the amount of unused commitments.

Loans are not subject to interim amortization.

The credit agreement requires CareTrust to comply with financial maintenance covenants to be tested quarterly, consisting of a maximum debt to asset value ratio, a maximum secured debt to asset value ratio, a maximum secured recourse debt to asset value ratio, a minimum fixed charge coverage ratio and a minimum net worth.

Following the spin-off, Columbia, Md.-based CareTrust is a separate and independent publicly traded, self-administered, self-managed real estate investment trust primarily engaged in the ownership, acquisition and leasing of health-care-related properties.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.