Skilled Healthcare Group To Continue Pursuing HUD Insured Loans For Up To $460M On 78 Properties
Skilled Healthcare Group (NYSE: SKH) today announced that the U.S. Department of Housing and Urban Development (HUD) has informed the Company that it will resume processing the Company's pending application for approval of up to $460 million in HUD-insured loans. As previously announced, the Company had received formal portfolio conditional credit approval from the U.S. Department of Housing and Urban Development (HUD) for loans up to an aggregate of $460 Million in HUD insured loans secured by up to 78 facilities under HUD's Section 232 loan program. However, on October 31, 2012, the California Attorney General's Bureau of Medi-Cal Fraud & Elder Abuse filed a complaint against Eureka Healthcare and Rehabilitation Center, LLC, Skilled Healthcare, LLC and the Company (the "BMFEA Action"). HUD subsequently informed the Company that it would not process or underwrite any HUD-insured loans until such time as the BMFEA Action was resolved to HUD's satisfaction. As previously disclosed, on February 15, 2013, the parties to the BMFEA Action reached a mutually satisfactory settlement of the matter. The Company thereafter informed HUD of the terms of the resolution.
"While we have not determined the amount of borrowings we will ultimately seek under the HUD insured loan program, and all loan applications will be subject to further review and approval by HUD, we have submitted application fees to begin processing the first $100 million of HUD insured loans. At this point, with the ordinary processing time required for HUD to review and approve loans, we do not expect that our loan applications would begin to close until at least the second quarter of 2013. We have identified properties for further HUD insured loan applications up to the maximum value currently permitted under our senior secured credit agreement, to bring the total to $250 million, but we have not yet submitted the fees associated with that underwriting. We expect to evaluate whether to submit the next tranche of loan applications as the first loan applications proceed through the loan underwriting process. As a reference point, should we proceed with and close $250 million in aggregate HUD insured loans, at current interest rates we would anticipate annual interest expense savings of approximately $10 million per annum," said Boyd Hendrickson, Chairman and Chief Executive Officer of Skilled Healthcare Group.
(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.