BIO - HC1

This offering has a low 10-year average debt service coverage ratio of 1.67. Potential mitigant: The tenants have net-leases with investment grade guarantors backing both leases.     

The sponsor for this offering has chosen not to use a master lease. This could potentially hinder the trust if the tenant ceases operations at either property. Both leases allow their tenants to terminate operations, however even if that occurs Bio-Life still will be obligated to make their lease payments. A noteworthy risk would be when the sponsor is trying to sell the properties and either one, or both, properties are lacking a tenant. Under these circumstances the inability to re-tenant could limit the trust's ability to receive a full return of capital and to make profit on the property's final sale.

The syndication costs a high for an offering utilizing leverage.

There is a cash sweep in the last year of the loan term.

According to the terms of the lease for the Utah property, its landlord is responsible for any needed repairs on the roof, all driveways, parking areas, sidewalks, and roads located on the property.  The property condition report projects that such repairs and replacements should cost $28,000. Upfront reserves for this offering are $30,000.

The sponsor has committed to take $71,000 from first year cash flow and must pay $8,000 into reserves annually. The sponsor is using the $71,000 to even out cash distributions during the hold period, but using yearly additions paid in to reserves, the trust expects there to be an additional $80,000 available for use at the properties.