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CTL Loan for Fresenius Dialysis Building

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CTL Loan for Fresenius Dialysis Building:

Loan Product for a Fresenius Dialysis Building.  Below is a summary of one of several products available through Caffrey & Company, LLC for a CTL Loan for Fresenius Dialysis Building.  Rates are as of September 16, 2020.  We can work with 1031 Investors to acquire a Fresenius Dialysis Building.

National Credit Lease Program Highlights for a CTL Loan on a Fresenius Dialysis building:

  • Loans from $750,000 to $10,000,000 and up
  • Multiple structures offered

Including 10 Year Fixed Rate

  • Typical rates presently ranging from 3.79% to 3.99%
  • Typical amortization: 25 years to 30 years
  • Most require a minimum down payment between 20% and 25% of the purchase.
  • Caffrey Loan Placement fee 1.0%
  • Typical recourse: 20% to 25% Limited
  • Flexible prepayment with extra 10% annual paydown allowed with no premium charged
  • Minimum remaining primary lease term: 7 Years
  • All loans assumable, with only ¼% fee
  • Optional 50-day rate lock available
  • Rate Lock—50 days from CCL acceptance and deposit submission
  • Expedited closing process targets 33—35 days, CCL to potential closing table

Below is a decription of the company

From Fresenius Q2 2020 report Germany Based Company):

“We are the world’s largest kidney dialysis company, based on publicly reported revenue and number of patients treated. We provide dialysis care and related services to persons who suffer from end-stage renal disease (“ESRD”) as well as other health care services. We also develop, manufacture and distribute a wide variety of health care products, which includes dialysis and non-dialysis products. Our dialysis products include hemodialysis machines, peritoneal cyclers, dialyzers, peritoneal solutions, hemodialysis concentrates, solutions and granulates, bloodlines, renal pharmaceuticals and systems for water treatment. Our non-dialysis products include acute cardiopulmonary and apheresis products. We supply dialysis clinics we own, operate or manage with a broad range of products and also sell dialysis products to other dialysis service providers. We sell our health care products to customers in around 150 countries and we also use them in our own health care service operations. Our dialysis business is therefore vertically integrated. We describe certain of our other health care services as “Care Coordination.” Care Coordination currently includes, but is not limited to, value and risk-based arrangements, pharmacy services, vascular, cardiovascular and endovascular specialty services as well as ambulatory surgery center services, physician nephrology and cardiology services, urgent care services and ambulant treatment services. All of these Care Coordination services together with dialysis care and related services represent our health care services. We estimated the volume of the global dialysis market was approximately €80 billion in 2019. Due to the complexity and evolving nature of Care Coordination services, we are currently unable to estimate the global volume of this market. Dialysis patient growth results from factors such as the aging population and increased life expectancies; shortage of donor organs for kidney transplants; increasing incidence of kidney disease and better treatment of and survival of patients with diabetes, hypertension and other illnesses, which frequently lead to the onset of chronic kidney disease; improvements in treatment quality, new FRESENIUS MEDICAL CARE AG & Co. KGaA 8 pharmaceuticals and product technologies, which prolong patient life; and improving standards of living in developing countries, which make life-saving dialysis treatment available. We are also engaged in different areas of health care research. As a global company delivering health care services and products, we face the challenge of addressing the needs of a wide variety of stakeholders, such as patients, customers, payors, regulators and legislators in many different economic environments and health care systems. In general, government-funded programs (in some countries in coordination with private insurers) pay for certain health care items and services provided to their citizens. Not all health care systems provide payment for dialysis treatment. Therefore, the reimbursement systems and ancillary services utilization environment in various countries significantly influence our business.”

Here is a link to the 2019 annual report for Fresenius.

Credit Agency reports for Fresenius:

Standard and Poors follows and rates the company with a BBB investment grade credit rating.  The following is a summary of the last review (May 23, 2019) from S&P:

(from S&P) Fresenius Group Upgraded To ‘BBB’ On Reduced Risk Of Acquisitions Denting The Balance Sheet; Outlook Stable

  • 23-May-2019 07:16 EDT
  • We expect that Germany-based health care group Fresenius SE & Co. KGaA (FSE) will post robust 2019 results, supported by the return to growth of its dialysis business, and anticipate no further sizable acquisitions this year.
  • As such, we expect debt to EBITDA of less than 3.5x at year-end 2019, and now see the risk of a transformative acquisition hurting the group’s financial metrics as relatively remote in the near term.
  • We are therefore removing our one-notch negative financial policy adjustment to the ratings and upgrading FSE and its dialysis care subsidiary Fresenius Medical Care AG & Co. KGaA (together the Fresenius group) to ‘BBB/A-2’ from ‘BBB-/A-3’.
  • The stable outlook reflects our expectations that the group will report continuous EBITDA growth while maintaining adjusted leverage at about 3.5x.

PARIS (S&P Global Ratings) May 23, 2019–S&P Global Ratings today took the rating actions listed above. We upgraded Fresenius group, because we see the risk of a transformative acquisition denting the group’s financial metrics as relatively remote in the near term, and are therefore removing our one-notch negative adjustment for group’s financial policy. The upgrade reflects our expectation of the group’s solid organic top line and EBITDA growth as well as Fresenius not undertaking any additional sizable acquisitions this year. We consider that the prospects of solid organic growth limit the need for external growth and that the anticipated increase in EBITDA enhances the group’s deleveraging capacities.

The group’s adjusted leverage has averaged 3.4x for the past five years, and we expect that it will remain close to 3.5x and below 4.0x sustainably. We note that the group’s leverage has not exceeded 4x in the past 10 years, despite sizable acquisitions. Even with the acquisition of Akorn–which was planned last year but did not materialize–the group’s leverage would have been below 4.0x. This is in line with the group’s stated financial policy of maintaining net debt to EBITDA of 2.5x-3.0x and exceeding this only temporarily in case of sizable acquisition (translates into S&P Global Ratings-adjusted net debt to EBITDA of 3.0x-3.5x), excluding International Financial Reporting Standard (IFRS) 16 adjustments.

We have revised upwards our forecasts for the group’s U.S. dialysis business, since the potential threat of price cuts initiated by ballot initiatives is now more remote. While the German hospital business is facing an uptick in outpatient treatment as well as regulatory changes, we believe the group is swiftly adapting to this new environment. We think that the Spanish hospital activity and the Kabi division will continue to report solid trading performance. We continue to view the group’s business risk profile as strong, supported by a track record of solid organic growth, which only temporarily slowed in 2018.

FSE’s financial profile is characterized by a track record of acquisitions that use debt as the primary source of financing. Acquisitions exceeded €2.0 billion per year between 2012 and 2014. After a temporary break in 2015, the group announced the sizable acquisition of Quironsalud for almost €6.0 billion in 2016 and then that of NxStage for about €1.7 billion in 2017, which only closed in 2019. The group also bid for Akorn, a U.S. hospital supplier, for an enterprise value of about $5.2 billion, but Fresenius eventually cancelled the transaction.

We view positively Fresenius’ track record of free cash flow generation. That said, we estimate it will reach a low point in 2019, but still remain in excess of €1.0 billion per year, due to a peak in working capital and in discretionary growth capital expenditure (capex). We expect free cash flow generation to increase to €2.0 billion in 2020. With dividends of less than €1.0 billion per year, the group has more than €1.0 billion annually for debt reduction.

The stable outlook on Fresenius group reflects our expectation that the group will report profitable growth while maintaining debt to EBITDA at about 3.5x. This implies no sizable acquisitions in 2019, aside from NxStage, which the group announced in 2017 and closed in first-quarter 2019.

Any upgrade is remote at this stage, since it would imply adjusted leverage decreasing below 3.0x, an event that we do not foresee and that would not be commensurate with the group’s stated financial policy.

The ratings would come under pressure if we note any deviation in terms of financial policy and any unforeseen transformative acquisition that would push the group’s average leverage ratio to about 4x or above. We see downside from operating performance as less likely, but it could be triggered by operating margins deteriorating significantly. This could occur if the group were unable to offset pressure from reimbursement changes, mainly in the U.S., with operating efficiency delivered by the rest of its business.

Moody’s last rated Fresenius SE & CO. KGaA (Germany) on April 26, 2017 Baa3 with a Stable Outlook.

Neither rating agency has updated the ratings since the COVID-19 pandemic.

Summary:

Many lenders are attracted to this company and would be able to provide aggressive loan terms for properties in the lower 48 states. If this loan product is not a great fit, check out interest rates for other commercial real estate loans on our web site, Commercial Real Estate Interest Rates.

Caffrey & Company LLC is a proud member of the Commercial Finance Broker Network and Inter-Capital Group.  For more innformaiton contact:  Mike Caffrey (913) 402-7077 or email at [email protected]

On our web site you can read about specific loan products: www.caffreyloans.com/loan-products, offered by Freddie Mac, Fannie Mae, HUD/FHA, Commercial Mortgage Back Securities (CMBS) and other loan products. Want more details on sample interest rates for apartment check out Interest Rates for Apartment Loans also on our web site: www.caffreyloans.com/apartment-loans.

Have a question please contact
Mike Caffrey
Telephone: (913) 402-7077
[email protected]
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