EXHIBIT (A)(5)(F)
[RED CAPITAL GROUP LETTERHEAD]
October 9, 2001
Xx. Xxxx Xxxxxx
President
ARV Assisted Living, Inc.
000 Xxxxxxx Xxx., X-0
Xxxxx Xxxx, XX 00000
RE: EXTENSION AND MODIFICATION OF RED MORTGAGE CAPITAL, INC.'S
("RMC") LOAN TO VILLA LAS XXXXX (THE "PROJECT").
Dear Xx. Xxxxxx:
This letter is to follow up on our recent discussions regarding the
referenced Project. We are interested in working with you to provide an
extension and modification to the existing first mortgage loan secured by Villa
las Xxxxx (the "Loan") using the funding capabilities of Red Mortgage Capital,
Inc. ("RMC") and/or other lenders (collectively, "Lender"). We understand that
ARV is reviewing an opportunity to purchase the P-III assets from the limited
partners.
Identified below are some very basic transaction parameters for the Loan
Modification. Please note that these terms are preliminary and are intended for
discussion only, and are subject to change as we undertake our detailed
analysis:
Borrower: Retirement Inns III, L.L.C., a single asset
entity.
Additional Loan Amount: An amount equal to the lesser of $4,000,000, and
(a) when combined with the Loan 80% of MAI
appraised value and (b) an amount that produces a
1.30x DSCR using underwritten Net Operating
Income.
Interest Rate: 10.25%
Financing Fees: a) Three-fourths percent (.75%) of the outstanding
Loan for the extension.
b) $100,000 for the Additional Loan Amount
Maturity Extension: January 1, 2003
Xx. Xxxx Xxxxxx
October 9, 2001
Page 2
Additional Collateral: a) ARV guaranty of payment for 50% of Loan
b) Deposit in the amount of $3.0 million to be
held by RMC
c) Assignment of ARV's equity interest in the
Project and Xxxxxxxx Xxxxxx
Other: a) ARV will commit a minimum of $3,000,000 cash
to the acquisition of the Project.
b) ARV can apply a portion of the required cash
contribution by purchasing a subordinated piece
of RMC's loan with no foreclosure rights.
c) A loan paydown at application to HUD will be
required should the application for HUD
mortgage insurance be less than the outstanding
mortgage amount.
Permanent Financing
Exclusive: The Borrower and ARV shall reaffirm that RMC has
the exclusive right, but not the obligation, to
arrange or provide any replacement permanent
financing for the Project. It is expected that the
permanent finance will be a HUD insured mortgage
processed by RMC. A draft contract will be
attached to the engagement letter.
Of course, there will be other terms and conditions for this financing,
including matters of security, collateral, third party reports, etc. Any
commitment to lend will require approval from our Loan Committee(s).
We would be glad to prepare a more detailed term sheet and an engagement
letter if you find these discussion terms of interest. Please let us know if
you would like us to proceed in this manner and do not hesitate to call with
any questions.
Very truly yours,
RED MORTGAGE CAPITAL, INC.
/s/ XXXXX X. XXXXX
------------------------------
Xxxxx X. Xxxxx
Managing Director
cc: Xxxxxxxxx X. Xxxxxx - Red Mortgage Capital, Inc. (Columbus, OH)
Xxxxxxx X. Xxxx - Red Mortgage Capital, Inc. (Columbus, OH)
Xxxx X. Xxxxx - Red Mortgage Capital, Inc. (Columbus, OH)
