Borrowers Request Approval for Sale to HCA Holdings

The borrowers for the Forest Park Medical Center–Fort Worth construction loan closed the sale in late May.

DALLAS—The borrowers under the Forest Park Medical Center mortgage loan filed a motion with the bankruptcy court to request approval for a sale of the real estate asset to an affiliate of HCA Holdings Inc. , according to Sabra Health Care REIT Inc . Last week, Forest Park Realty Partners III LP and BT Forest Park Realty Partners LP , along with HCA, executed a purchase and sale agreement, subject to bankruptcy court approval and customary closing conditions, that will permit HCA to purchase the hospital real estate that serves as collateral for the Dallas mortgage loan for $135 million. The PSA provides for an outside date to close the sale of June 30, 2016. Commenting on the developments, Rick Matros , CEO and chairman of Sabra Health Care REIT, said, “We are pleased that the full value of our Dallas investment, including all interest earned, has been realized. Upon completion of the proposed sale and repayment of outstanding principal and interest on this investment, we will have received total cash of approximately $323.5 million over the life of our investments in the three Forest Park hospitals, which is $18.5 million greater than our total cash outlays for these investments. Our pro forma leverage, after giving effect to the acquisition of the previously announced NMS facility and to the proceeds we have realized or expect to realize from the three Forest Park hospitals, will drop to 5.17x. Although we did not realize the long-term benefit we had hoped for with the Frisco hospital, our overall investment thesis has resulted in a positive outcome for what was a complex situation.” As of May 30, 2016, the outstanding principal balance on the Dallas mortgage loan was $110 million, with $14.6 million of accrued and unpaid interest and fees. Sabra expects to fully realize all outstanding amounts upon closing of the sale, which would result in a 10.4% annualized rate of return on its investment. The $14.6 million of outstanding accrued and unpaid interest and fees consists of $2.3 million of interest previously recognized and $12.3 million of unrecognized interest and fees (unrecognized revenue of $0.19 per diluted common share). Sabra expects to use the proceeds to make additional payments on its revolving credit facility and to finance future investments. Michael Costa , senior vice president of finance and controller for Sabra Health Care REIT, tells GlobeSt.com: “We feel they are best in class real estate assets, and with proper management at the hospital level, the Frisco hospital could have reached a higher potential.” Sabra also announced that on May 25, 2016, the borrowers under the Forest Park Medical Center–Fort Worth construction loan closed the previously announced sale of the Fort Worth hospital and medical office real estate. In connection with the closing of that sale, Sabra received $70.7 million, which included all outstanding principal, interest and late fees under the loan. The proceeds will be used to make additional payments under its revolving credit facility.