NorthStar-Formation-Safanad venture gets $200.8 million of loans

By Toni Weeks

San Luis Obispo, Calif., July 8 – A joint venture formed for the $1.1 billion acquisition of the U.S.-based operations of Extendicare International Inc. obtained a $75 million mezzanine loan from NorthStar Healthcare Income, Inc., an $87.3 million five-year second-lien senior secured loan with General Electric Capital Corp. and a $38.5 million three-year senior secured loan with Pacific Western Bank, according to an 8-K filing with the Securities and Exchange Commission.

The borrower is FC Domino Acquisition, LLC, a company indirectly owned 36.67% by Northstar, 46.66% by affiliates of Safanad Management Ltd., and 16.67% by affiliated of Formation Capital, LLC.

The 67-month mezzanine loan bears interest at 10% per year and was originated at a 1% discount.

In addition, NorthStar Healthcare earned a commitment fee of 75 basis points.

The loan may be prepaid in the first three years subject to the payment of a yield maintenance premium of at least 1%. If the loan is prepaid during months 37 to 48, FC Domino must pay a prepayment penalty equal to 3%. Thereafter, the loan may be prepaid in whole or in part without penalty.

Also in connection with the acquisition, FC Domino, Extendicare Holdings Inc. and some subsidiaries entered into an $87.3 million five-year second-lien senior secured loan with General Electric Capital Corp. at an interest rate of three-month Libor plus 375 basis points and a $38.5 million three-year senior secured loan with Pacific Western Bank at an interest rate of one-month Libor plus 450 bps.

FC Domino assumed $527.2 million of senior secured loans from the U.S. Department of Housing and Urban Development with an average fixed interest rate of 3.79% plus a 0.50% mortgage insurance premium and a weighted average remaining term of 29 years, a $98.4 million senior secured loan from PrivateBank and Trust Co. with an interest rate of one-month Libor plus 475 bps and a remaining term of 47 months and a $60.0 million first lien senior secured loan with General Electric Capital Corp. with an interest rate of Libor plus 375 bps and a term of five years.

Located in Greenwood Village, Colo., NorthStar Healthcare Income is a public, non-traded real estate investment trust.

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