purchASE/LEASEBACK

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Purchase/ Leaseback

Crown Care offers purchase/leaseback solutions through Crown Financial Services, (CFS). When skilled nursing and assisted living facility operators have distressed or underperforming assets that they need to turn around, A purchase / leaseback strategy may be the best option.

CROWN HEALTHCARE

IDENTIFIES

We will identify undervalued assets.

LEVERAGES

We will work to leverage our extensive network of
banks and lenders.

EXECUTES

We will provide experienced managers and oversight to
execute on the plan.

Companies will typically use leasebacks when they need to utilize the cash they invested in an asset for other purposes but they still need the asset itself to operate their business.
Sale-leasebacks can be an attractive alternative method of raising capital. When a company needs to raise cash, it typically takes out a loan (incurring debt) or affects equity financing (issuing stock).

A loan must be repaid and shows up on the company's balance sheet as a debt.
A leaseback transaction can actually help improve a company's balance sheet health: The liability on the balance sheet will go down (by avoiding more debt), and current assets will show an increase (in the form of cash and the lease agreement).
Although equity does not need to be paid back, shareholders have a claim on a company's earnings based on their portion of its stock.

CREATIVE Real Estate Financing
for Senior Housing

How it works

Acquisition

When an operator partners with CFS to acquire a facility, we work with them to complete the project using little or no equity from the operator.

Post-Acquisition

CFS own the real estate and the client owns the operator that leases the facility. The client can then buy the facility back.

TYPICAL LEASE TERMS

At the time of purchase, the operating and property companies will be separated, with the client owning the OpCo and CFS owning the PropCo. The lease is the most significant document between CFS and the client. It is a triple net lease with market escalators. The lease rate is based upon risk and collateral and then applied to total deal costs.

Loan-to-Value
LTV 75%

BUY BACK SALE AGREEMENT

At the time of purchase, CFS and the operator enter a sale agreement. The operational risks of the project will impact the pricing of the sale agreement, but the goal is to have the operator purchase the facility in years three through five. The majority of operators are able to improve cash flow and increase the facility’s value. Through a successful turnaround, the operator may build enough equity to allow them to repurchase the facility with no cash requirement and a loan-to-value (LTV) around 75%.

The Benefits