After rebranding as AlerisLife last week, the Newton, MA-based company formerly known as Five Star Senior Living announced Monday the closing of a $95 million senior secured term loan.
“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,” AlerisLife President and CEO Katie Potter said in a statement.
Midcap Funding VIII Trust is the administrative agent and lender for the loan, of which $63 million is outstanding. The remaining loan proceeds are subject to a $12 million capital improvements holdback; $20 million becomes available upon achieving certain financial thresholds by the middle of next year.
The maturity date of the new loan is Jan. 27, 2025. AlerisLife will have the option of extending the loan for one year, twice, if the company achieves specific financial thresholds.
The loan is secured by real estate mortgages on 14 senior living communities that have a total of 1,477 living units. The communities are owned by AlerisLife and operated by Five Star, which now is a division of AlerisLife. AlerisLife said that the gross carrying value of the communities is approximately $152.5 million as of Sept. 30.
“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,” Potter said. “Following today’s announcement, we feel well capitalized to accomplish these goals and maximize shareholder value.”
AlerisLife reported having more than $100 million in unrestricted cash and cash equivalents. In connection with entering the new term loan, the company also terminated its existing secured revolving credit facility, which had no borrowings outstanding and was scheduled to mature in June.