CapitalSource sale to Omega Health Investors
There have been several articles about the recent sale of nursing homes by CapitalSource. The articles are unclear about which nursing homes will be sold. Below are links and information from several articles.
McKnight's wrote that CapitalSource, commercial lending company to many nursing home chains, will sell off its long-term care interests to Omega Healthcare Investors in a deal valued $860 million. The sale covers a CapitalSource lease portfolio that includes 143 long-term care facilities. Under the deal, Omega Healthcare Investors, which already owns or holds mortgages for 254 skilled nursing and assisted living facilities, will assume $529 million in asset-related debt, and give CapitalSource $280 million cash and $51 million in OHI stock. A second article from McKnight states that CapitalSource Inc.,sold the last of its nursing home interests. This marks the company's exit from the skilled nursing ownership business. The latest sale takes CapitalSource out of nursing home ownership, but it says it will continue to provide financing for owners and operators of long-term-care facilities.
CapitalSource sold the 37 nursing homes to an undisclosed buyer for an all-cash price of $100 million, the company said in a statement. The money will be used to pay down debts associated with the properties. The sale is part of a wider sale of its net lease portfolio, including the already disclosed divestiture of 143 skilled nursing facilities to Omega Healthcare Investors, Inc. CapitalSource will continue to provide financing for owners and operators in the long-term care industry, according to a company spokesman.
This final sale, along with the Omega sale and a Department of Housing and Urban Development mortgage financing deal, should net CapitalSource $495 million. The company said it would use these revenues to reduce the balance on its syndicated bank facility and add to overall company liquidity. The additional liquidity should put the company in a position to expand its healthcare lending franchise, the CapitalSource release said.
The Washington Post had an article on the sale stating that CapitalSource needed help to relieve the debt acquired during the recession. CapitalSource is a specialty financing companies that has been hit hard by the credit crisis and the recession. Auditors at Bethesda-based American Capital issued an opinion earlier this year that the firm was in danger of not continuing as a business. The company has disappointed analysts this year because of higher-than-expected losses on its loans to businesses and commercial real estate developers.
CapitalSource, which makes loans from $10 million to $100 million to nursing homes, said selling its 180 nursing homes is part of its transition to a bank. The company earlier this year changed its status from a publicly traded real estate investment trust to a bank. James Pieczynski, who runs CapitalSource's health-care lending business, and Steven Museles, the company's chief legal officer, will become co-chief executives.