AlerisLife, formerly known as Five Star Senior Living, closed a $95 million senior secured term loan with Midcap Funding VIII Trust (“MidCap”), as administrative agent and lender, of which $63 million is currently outstanding. The remaining loan proceeds are subject to a $12 million capital improvements holdback and $20 million becomes available upon achieving certain financial thresholds by mid-2023. The maturity date of the new loan is January 27, 2025 and includes two, one year extensions at AlerisLife’s option, to extend the maturity date through January 27, 2026 and January 27, 2027, as applicable, subject to the achievement of certain financial thresholds.
The new loan requires interest to be paid on outstanding borrowings at Term SOFR (subject to a minimum base rate of 50 basis points) plus approximately 450 basis points. The loan is secured by real estate mortgages on 14 senior living communities with 1,477 living units owned by AlerisLife and operated by Five Star Senior Living, a division of AlerisLife, with a gross carrying value of approximately $152.5 million as of September 30, 2021. AlerisLife also owns an additional 6 unencumbered senior living communities with 622 living units.
Katie Potter, President and Chief Executive Officer of AlerisLife, made the following statement about today’s announcement: “The closing of this senior secured term loan provides us with increased liquidity to use at our discretion and additional flexibility for the coming years as we execute on our strategic business plan. With the recent rebrand to AlerisLife, we marked our expansion from primarily a senior living owner and operator to a more diversified and comprehensive partner, and we expect to evolve our company by investing in new and existing revenue streams, driving a shorter sales cycle, maximizing our share of customer spending, increasing pre-senior living touch points with customers and reducing turnover costs. Following today’s announcement, we feel well capitalized to accomplish these goals and maximize shareholder value.”
As of the closing of this term loan, AlerisLife had over $100 million of unrestricted cash and cash equivalents. In connection with entering this new term loan, AlerisLife also terminated its existing secured revolving credit facility, which had no borrowings outstanding and was scheduled to mature in June 2022.