On the eve of NIC, KeyBank Real Estate Capital announced a new unitranche loan program with Welltower, Inc., and we hope it resulted in some meetings with curious potential clients. Entitled the Healthcare Real Estate Fund, it will total $750 million in lending capacity to provide first mortgage financing on seniors housing communities and skilled nursing facilities. Terms are expected to be between three and five years, with loan amounts ranging from $25 million to $75 million, approximately.
Since the unitranche loan blends senior and junior debt pricing and terms into a single first lien debt facility rather than creating two classes of debt and coordinating among multiple lenders, we estimate that the rates could have a floor of roughly LIBOR+400. But that would vary depending on the leverage in the deal.
The program is good for KeyBank since the bank can offer another product to its clients at slightly more aggressive terms. It’s also clearly good for Welltower since the REIT is always searching for yield and is looking to grow its investment in the industry after significant divestments in the past several years. And the borrowers benefit from a certainty of closing standpoint and from a single lending entity and blended interest rate. So, a win-win-win.
