Sava, the fifth largest operator a of nursing homes in the U.S., is in the market with a $260 million of senior notes backed by a two-year, floating rate mortgage loan that is secured by 167 skilled nursing facilities, according to Fitch Ratings.
SNFs provide 24-hour nursing to seniors requiring constant care or nursing services. The properties are, operationally, one step below hospitals.
The collateral also includes all furniture, fixtures, equipment and personal property used in the operation of each property as well as Sava’s borrowers’ interest in healthcare collateral including the healthcare licenses.
Deutsche Bank is the lead manager on the deal, COMM 2014-SAVA. The senior notes issued under the trust have been assigned preliminary ratings of AAA’ by Fitch. The trust will also offer $98.5 million of class B notes; $114.45 of class C notes and $77 million of class D notes that will not be rated by Fitch.
In addition to the trust debt there is a $150 million B-note as well as $240 million in mezzanine debt. At the operator level there is a $125 million working capital facility secured by accounts receivable. There are also approximately $216 million in inter-company and other notes, which are fully subordinate to the mortgages.
Fitch said that the deal is exposed to a higher risk of liability claims given the large number of elderly residents and large number of employees associated with the properties.