AlerisLife (Formerly Known as Five Star Senior Living) Closes $95 Million Term Loan

Rhea-AI Summary

AlerisLife (Nasdaq: ALR) has successfully closed a $95 million senior secured term loan with MidCap Funding VIII Trust. Currently, $63 million is outstanding, with an additional $12 million contingent on capital improvements and $20 million tied to specific financial benchmarks. The loan matures on January 27, 2025, with options to extend. AlerisLife aims to utilize this liquidity for strategic investments and to enhance shareholder value, declaring over $100 million in unrestricted cash at loan closing.

Positive

• Secured a $95 million term loan, improving liquidity.
• Plans for strategic investments aimed at enhancing shareholder value.
• Possesses over $100 million in unrestricted cash.

Negative

• Loan proceeds may be insufficient to execute strategic plans.
• There are uncertainties in achieving targeted revenue streams and cost reductions.

NEWTON, Mass.--(BUSINESS WIRE)-- AlerisLife (Nasdaq: ALR), formerly known as Five Star Senior Living, today announced that it has closed a $95 million senior secured term loan with Midcap Funding VIII Trust (“MidCap”), as administrative agent and lender, of which $63 million is currently outstanding. The remaining loan proceeds are subject to a $12 million capital improvements holdback and $20 million becomes available upon achieving certain financial thresholds by mid-2023. The maturity date of the new loan is January 27, 2025 and includes two, one year extensions at AlerisLife’s option, to extend the maturity date through January 27, 2026 and January 27, 2027, as applicable, subject to the achievement of certain financial thresholds.

The new loan requires interest to be paid on outstanding borrowings at Term SOFR (subject to a minimum base rate of 50 basis points) plus approximately 450 basis points. The loan is secured by real estate mortgages on 14 senior living communities with 1,477 living units owned by AlerisLife and operated by Five Star Senior Living, a division of AlerisLife, with a gross carrying value of approximately $152.5 million as of September 30, 2021. AlerisLife also owns an additional 6 unencumbered senior living communities with 622 living units.

Katie Potter, President and Chief Executive Officer of AlerisLife, made the following statement about today’s announcement:

“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. 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. Following today’s announcement, we feel well capitalized to accomplish these goals and maximize shareholder value.”

As of the closing of this term loan, AlerisLife had over $100 million of unrestricted cash and cash equivalents. In connection with entering this new term loan, AlerisLife also terminated its existing secured revolving credit facility, which had no borrowings outstanding and was scheduled to mature in June 2022.

About AlerisLife (Nasdaq: ALR):

AlerisLife enriches and inspires the lives of its older adult customers across the United States by delivering an exceptional and enhanced resident experience to senior living and active adult residents, while also offering lifestyle services to the younger “choice-based” consumer. The Company is headquartered in Newton, Massachusetts. For more information, visit www.alerislife.com.

WARNING REGARDING FORWARD-LOOKING STATEMENTS

This press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Also, whenever ALR uses words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “will,” “may” and negatives or derivatives of these or similar expressions, ALR is making forward-looking statements. These forward-looking statements are based upon ALR’s present intent, beliefs or expectations, but forward-looking statements are not guaranteed to occur and may not occur. Actual results may differ materially from those contained in or implied by ALR’s forward-looking statements as a result of various factors. Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond ALR's control. For example:

• Ms. Potter states that the loan proceeds provides liquidity and flexibility in the future to execute on ALR’s strategic plans and ALR feels well capitalized to achieve its goals. However, the loan proceeds may be insufficient to execute on ALR’s strategic plans and ALR may not realize the anticipated benefits of any such plans.
• Ms. Potter states that ALR anticipates evolving by investing in new and existing revenue streams, achieving a shorter sales cycle, maximizing its share of customer spending, increasing pre-senior living touch points with customers and reducing turnover costs. However, ALR may not achieve these targets, which would have an adverse effect on ALR’s financial performance and operations.

The information contained in ALR’s filings with the Securities and Exchange Commission, or SEC, including under “Risk Factors” in ALR’s periodic reports, or incorporated therein, identifies other important factors that could cause ALR’s actual results to differ materially from those stated in or implied by ALR’s forward-looking statements. ALR’s filings with the SEC are available on the SEC's website at www.sec.gov.

You should not place undue reliance upon forward-looking statements.

Except as required by law, ALR does not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220129005007/en/

Michael Kodesch, Director, Investor Relations

(617) 796-8234

Source: AlerisLife

FAQ

What is the amount of the senior secured term loan closed by AlerisLife (ALR)?

AlerisLife closed a senior secured term loan for $95 million.

When is the maturity date of AlerisLife's new term loan?

The maturity date of the new term loan is January 27, 2025, with possible extensions.

What is the current outstanding amount of AlerisLife's term loan?

As of now, $63 million of the term loan is currently outstanding.

What financial flexibility does AlerisLife expect from the term loan?

AlerisLife anticipates increased liquidity and flexibility to support its strategic business plan.

How much unrestricted cash does AlerisLife have following the loan closing?

AlerisLife has over $100 million in unrestricted cash and cash equivalents.